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Full text of "Housing, Chicago style : a consultation sponsored by the Illinois Advisory Committee to the United States Commission on Civil Rights"

Housing: Chicago Style 



A CONSULTATION 



October 1982 



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,_, ..., 4 Advisory Committee to the United Stales Commission on Civil Rights in Chicago 

mbcr « '), 1981. Those papers will bo submillcd to the Commission for its consideration. Information, opinions, and 
ions should be allrihuted to individual authors and not to the Commission or the Illinois Advi.sory Committee. 



UNIVERSITY OF MARYIAND 

SCHOOL OF LAW 
LIBRARY 

^TiMOA£. MARYLAND 



THE UNITED STATES COMMISSION ON CIVIL RIGHTS 

The United States Commission on Civil Rights, created by the Civil Rights Act of 
1957, is an independent, bipartisan agency of the executive branch of the Federal 
Government. By the terms of the act, as amended, the Commission is charged with 
the following duties pertaining to discrimination or denials of the equal protection of 
the laws based on race, color, religion, sex, age, handicap, or national origin, or in the 
administration of justice: investigation of individual discriminatory denials of the right 
to vote; study of legal developments with respect to discrimination or denials of the 
equal protection of the law; appraisal of the laws and policies of the United States with 
respect to discrimination or denials of equal protection of the law; maintenance of a 
national clearinghouse for information respecting discrimination or denials of equal 
protection of the law; and investigation of patterns or practices of fraud or 
discrimination in the conduct of Federal elections. The Commission is also required to 
submit reports to the President and the Congress at such times as the Commission, the 
Congress, or the President shall deem desirable. 

THE STATE ADVISORY COMMITTEES 

An Advisory Committee to the United States Commission on Civil Rights has been 
established in each of the 50 States and the District of Columbia pursuant to section 
105(c) of the Civil Rights Act of 1957 as amended. The Advisory Committees are 
made up of responsible persons who serve without compensa^fion. Their functions 
under their mandate from the Commission are to: advise the Commission of all 
relevant information concerning their respective States on matters within the 
jurisdiction of the Commission; advise the Commission on matters of mutual concern 
in the preparation of reports of the Commission to the President and the Congress; 
receive reports, suggestions, and recommendations from individuals, public and 
private organizations, and public officials upon matters pertinent to inquiries 
conducted by the State Advisory Committee; initiate and forward advice and 
recommendations to the Commission upon matters in which the Commission shall 
request the assistance of the State Advisory Committee; and attend, as observers, any 
open hearing or conference which the Commission may hold within the State. 



Housing: Chicago Style 

— A Consultation Sponsored by the Illinois 
Advisory Committee to the United States 
Commission on Civil Rights 



Attribution: 

Information and recommendations contained in 
these papers are to be attributed to the individual 
authors and do not necessarily reflect either the posi- 
tions or policies of the U.S. Commission on Civil 
Rights or its State Advisory Committee. This collec- 
tion of papers will be submitted to the Commission- 
ers for their consideration. 

Right of Response 

Prior to publication of a report, the State Advisory 
Committee affords to all individuals or organizations 
that may be defamed, degraded, or incriminated by 
any material contained in the report an opportunity to 
respond in writing to such material. All responses 
received have been incorporated, appended, or other- 
wise reflected in the publication. 



LETTER OF TRANSMITTAL 



Illinois Advisory Committee to the 

U.S. Commission on Civil Rights 

September 1982 



MEMBERS OF THE COMMISSION 

Clarence M. Pendleton, Jr.. Chairman 

Mary L. Smith, Vice Chairman 

Mary F. Berry 

Blandina Cardenas Ramirez 

Jill S. Ruckelshaus 

Murray Saltzman 



John Hope III, Acting Staff Director 



Dear Commissioners: 



The Illinois Advisory Committee submits its report, Housing: Chicago Style, as part 
of its responsibility to advise the Commission on civil rights developments in the state. 
This report presents the proceedings of a consultation entitled "Chicago's House 
Divided — Public Housing and the Dual Housing Market," held at the University of 
Illinois, Chicago Circle, December 8-9, 1981. 

At this consultation a variety of experts presented analyses and policy recommenda- 
tions dealing with the specific issues of Chicago's dual housing market and its public 
housing dilemmas, and the inadequacy of the community's housing stock in general. 
Among the participants were public housing residents, public officials at all levels of 
government, community organizers, scholars, and representatives of private industry. 

The basic picture presented at the consultation was, unfortunately, an ail-too 
familiar description of ongoing racial discrimination in the areas's housing market, 
dangerous conditions in most public housing projects, and an inadequate supply of 
housing particularly for minority and low income families. The photographs included 
in this report graphically illustrate the severity of Chicago's housing problems. 

But the consultation was not an exercise in condemnation. Many creative 
recommendations were forcefully presented by the participants. Despite some areas of 
disagreement, virtually all agreed aggressive actions must be taken by public and 
private sector officials and residents themselves. Chicago's housing problems are not 
unsolveable. Hopefully, dissemination of this report will contribute to a better, and 
more open, housing market, in Chicago and other American cities. 



Sincerely, 



Tom Pugh, Chairperson 
Illinois Advisory Committee 



ILLINOIS ADVISORY COMMITTEE TO THE U.S. 

COMMISSION ON CIVIL 

RIGHTS 



Tom Pugh, Chairperson 
Peoria 



Myron D. MacLean 
Decatur 



Patricia T. Bergeson 
Chicago 



Edward A. Marciniak 
Chicago 



Thomas L. Bradley 
Chicago 



Zena Naiditch 
Springfield 



Irma Claudio 
Chicago 



Henry H. Romero 
Chicago 



Theresa F. Cummings 
Springfield 



Andrea Rozran 
Chicago 



Erma M. Davis 
Peoria 



Joseph J. Slaw 
Decatur 



Denis H. Detzel 
Chicago 



Susannah A. Smith 
Chicago 



Preston E. Ewing, Jr. 
Cairo 



Robert C. Spencer 
Petersburg 



Alice Mae Kirby 
Springfield 



Milton E. Stinson, Jr. 
Chicago 



Louise Q. Lawson 
Chicago 



Jacqueline B. Vaughn 
Chicago 



ACKNOWLEDGEMENTS 



The Illinois Advisory Committee wishes to thank the staff of the Commission's 
Midwestern Regional Office in Chicago for help in the preparation of this report. The 
project director for this consultation was Valeska S. Hinton, civil rights analyst. 
Writing and editing the report was the assignment of Gregory D. Squires, research 
writer. Special recognition goes to Tom Pugh, Chairperson of the Advisory 
Committee who contributed to the writing of the report and is responsible for all 
photographs in the report including the cover. Support services were provided by 
Mary K. Davis, Ada L. Williams, and Delores Miller. The project was undertaken 
under the overall supervision of Clark G. Roberts, Regional Director, Midwestern 
Regional Office. The staff of the Publication Support Center was responsible for final 
preparation of this document for publication. 



Contents 



INTRODUCTION: Chicago's House Is Falling Down 1 

Chicago's Housing: A Photographic Essay by Tom Pugh, Chairperson, Illinois 

Advisory Committee 5 

THE RESIDENTS 

Cabrini-Green by Marion Stamps 7 

Public Housing in the City of Chicago by Jerome Hunt 11 

THE ORGANIZERS 

Tenants Organizing for Stable Neighborhoods by Ralph Scott, Karen Walker, Mosi 

Kitwana, Bob Adams, and Hans Hintzen 15 

Mortgage Lending, Blacks and Hispanics: From the Dual Housing Finance Market 

to Reinvestment to a Unitary Unsatisfactory Market for All by Dennis Marino... 23 
Federal Housing Programs and the Pursuit of Equal Opportunity: The Role of the 

Courts by Leonard S. Rubinowitz 30 

The Dual Housing Market in the Chicago Metropolitan Area by Kale Williams 38 

THE DEVELOPERS 

The Establishment of Housing Patterns in Chicago by Michael W. Scott 48 

Housing Problems of Hispanics in Chicago by Mario Lopez 60 

FINANCIERS 

The Real House Divided: Regulations that Divide Families by Fidel Lopez 69 

The Urban Property Tax and Minorities by Arthur Lyons 73 

LOCAL ENFORCERS 

Promoting and Preserving Racial Residential Diversity: The Park Forest Case by 

Donald L. DeMarco 79 

Racial Diversity: A Model for American Communities by Roberta Raymond 85 

Recommendations for a Chicago Housing Plan to Assist Low and Moderate 

Income Tenants by Alderman David Orr 94 

STATE ENFORCERS 

Observations and Suggestions on Chicago's Shrinking Supply of Decent and 

Affordable Rental Housing: Public and Private by Ron Stevens 96 

The Dual Housing Market in Chicago by Joyce Tucker 103 

The Role of the State in Housing Policy by Michael Spivey 109 

FEDERAL ENFORCERS 

On Increasing Housing Opportunities for Minorities and Women: A Multi- 
Dimensional View of Current Practices and Ideals by Sam Riley 112 

HIGHLIGHTS OF "QUESTION AND ANSWER" SESSIONS 121 

vi 



TABLES 

Table 1 . Demographic Trends in Chicago Housing Authority Projects 71 

Table 2. Illinois Housing Development Authority 71 



APPENDICES 

Appendix I. Report of Committee on Problem Families 129 

Appendix II. Letter from Department of Housing and Development 138 



Introduction: Is Chicago's House Falling? 



Jane Byrne created quite a furor last year when she 
temporarily moved to Cabrini-Green, a virtually all 
black high rise public housing complex on Chicago's 
north side. Cabrini-Green is notorious for poor main- 
tenance, street gangs, rats, and just about every other 
problem commonly associated (often inaccurately) 
with public housing. Ironically, her new "home" was 
only ten blocks west of, and quite visible from, her 
Gold Coast apartment building. Some commended the 
Mayor for her bold leadership while others con- 
demned her for political grandstanding. While she 
spent only a handful of nights at her Cabrini-Green 
apartment, her actions stimulated public discussion 
over the adequacy of the city's housing stock and the 
extent to which housing is available on an equal 
opportunity basis. 

In Chicago and in other metropolitan areas around 
the country the twin issues of adequacy and equality 
in housing concern many public officials, people in 
private industry, and, most of all, low income minority 
families. In Chicago the housing stock is shrinking 
with some neighborhoods having lost as much as 20 
percent of all housing units in the past ten years. And 
according to 1980 census figures, two-thirds of the 
city's community areas are either more than 95 
percent black or are virtually all white. Similarly 
segregated is Chicago's fastest growing minority 
group, the Hispanics. The current administration in 
Washington is considering some new directions in 
housing policy, in part because of these issues. Many 
housing and civil rights experts have expressed con- 
cern, however, that these proposals will exacerbate 
rather than alleviate the problems of adequacy and 
equality in the nation's housing markets. 



In light of the longstanding history of housing 
problems in the city frequently referred to as the most 
segregated metropolitan area in the nation and recent 
policy initiatives, the Illinois Advisory Committee to 
the U.S. Commission on Civil Rights examined the 
issues of public housing and the dual housing market 
(now actually triple housing market given the Hispan- 
ic experience) in Chicago. On December 8 and 9 at the 
University of Illinois, Chicago Circle, the Committee 
heard public housing residents, community organiz- 
ers, scholars, elected and other public officials at all 
levels of government, and representatives of private 
industry offer their analyses of housing problems and 
their recommendations for resolving them. This vol- 
ume contains the papers which these experts provided 
for the Committee along with the highlights of 
discussions that occurred at the two day consultation 
entitled "Chicago's House Divided — Public Housing 
and the Dual Housing Market." Perhaps the most 
significant conclusion to be drawn from this meeting is 
that virtually all the experts who participated offered 
analyses and policy recommendations in direct contra- 
diction with those of President Reagan's Housing 
Commission. 

The principal objective of this inquiry was to 
generate recommendations from appropriate experts 
on how the city of Chicago in particular and the 
nation in general can provide decent housing for all 
residents and assure that such housing is available on 
an equal opportunity basis. The experts did not 
disappoint. Many recommendations were offered on a 
wide range of housing issues. Some called for very 
specific actions by particular individuals while others 
suggested philosophical guidelines for communities in 



1 



general. In some instances, the recommendations 
contradicted each other, resulting in some heated 
discussions at the consultation. 

General consensus prevailed on the fact that the 
supply of decent housing, public and private, was 
inadequate particularly for low income residents, and 
that racial minorities continue to face discriminatory 
barriers in the housing market. Most of the partici- 
pants agreed that stronger enforcement of fair housing 
laws, particularly at the federal level, is a key part of 
any remedy. Such efforts would involve legislation to 
provide the U.S. Department of Housng and Urban 
Development more administrative authority to enforce 
Title VIII of the Civil Rights Act of 1968, the federal 
fair housing law; enforcement of the Community 
Reinvestment Act which, according to Dennis Marino 
of the Woodstock Institute has been ignored since 
1980; stricter compliance on the part of lenders with 
Federal Home Loan Bank Board regulations which 
prohibit discriminatory credit practices; stricter en- 
forcement of equal employment opportunity laws 
within the real estate industry; more effective affirma- 
tive marketing in publicly-funded housing develop- 
ments; and effective enforcement of the recently-enact- 
ed Illinois fair housing law by the new Illinois 
Department of Human Rights. 

A variety of educational efforts were recommended. 
According to Kale Williams, Executive Director of 
the Leadership Council for Metropolitan Open Com- 
munities, whites have to learn that the federal fair 
housing act did not eliminate discriminatory housing 
practices, but minorities must learn that some progress 
has been made and more progress is possible. Mario 
Lopez, Executive Director of the Community Housing 
Education Corporation, cited the need to educate 
Hispanics on virtually all aspects of the housing 
industry, including construction and rehabiUtation, 
property management, financing, and legal rights. In 
addition, Lopez called for more bilingual staff in 
government housing agencies, bilingual signs in of- 
fices, and bilingual legal forms. 

"The most reprehensible set of actors is that of 
slumlords," according to Ron Stevens, Supervisor of 
the Housing Division of the Cook County State's 
Attorney's Office. He called for large fines, jail 
sentences, and even the removal of property from 
those who represent the most serious threat to 
communities as a result of mismanagement, arson-for- 
profit, and other practices that lead directly to the 
deterioration of housing and neighborhoods. 



Current tax laws were cited by some participants as 
critical problems, particularly for minority and low 
income families. Revisions of tax laws to favor tenants 
rather than owners, condominium converters, and 
speculators was called for by the Housing Agenda. 
Professor Arthur Lyons examined property tax assess- 
ments in Chicago and found that residents in minority 
areas tend to be overassessed, a pattern which he said 
has been found in several other cities. Among his 
recommendations is the need for more public scrutiny 
of the assessment process. Lyons briefly addressed the 
issue of tax abatements as a tool for attracting 
businesses, concluding that they do not work and 
should be eliminated entirely. 

One recommendation for reducing the cost of public 
housing offered by Jerome Hunt, a resident of a high 
rise public housing complex on the south side, is to 
remove the requirement that the Chicago Housing 
Authority pay union wages for construction and 
maintenance work. This recommendation was met 
with some concern for what might appear to be 
"union busting." 

Given the high cost of housing and mortgage money 
and the fact that wage increases are not keeping up 
with increases in the costs of home ownership, the 
rights of tenants have assumed greater importance in 
recent years, according to several participants. The 
Housing Agenda called for a tenants' counterpart to 
the Wagner Act that would enable tenants to collec- 
tively bargain with landlords over rents, building 
conditions, and other terms of tenant-landlord rela- 
tions. Chicago Alderman David Orr called for a fair 
rent commission to adjudicate complaints over rent 
gouging and condominium conversion legislation to 
minimize displacement and protect purchasers. Rent 
control laws which would permit landlords to pass on 
legitimate maintenance cost increases but which pro- 
hibit gouging, along with condominium conversion 
regulations were also recommended by Stevens. 

The merits of scattered-site public housing in 
minority as well as white neighborhoods and efforts to 
achieve planned integrated communities were the 
subject of rational discussion and emotional debate. 
Kale Williams applauded the efforts of those suburbs 
that have maintained diverse racial and ethnic com- 
munities and, along with Roberta Raymond, Oak 
Park Housing Center Director, and Donald DeMarco, 
Park Forest Assistant Village Manager, called for 
federal support of such efforts. Williams described a 
current proposal to divert money from scattered-site 
housing construction programs to operating budgets 



of older developments as "short-sighted in the ex- 
treme." 

HUD officials, Renault Robinson of the Chicago 
Housing Authority, and Jean Oden of UNITE were 
among those who challenged these efforts, arguing 
that low income minority residents should have the 
freedom to choose decent housing in their own 
communities and if they are scattered throughout the 
metropolitan area, their political power will be dimin- 
ished. The indecency in many public housing com- 
plexes was captured in Jerome Hunt's characterization 
of his building: "Babies crying, people dying. Eleva- 
tors not working. Damn near half the population is on 
dope." Marion Stamps, a former resident of Cabrini- 
Green, echoed Hunt's observations when she de- 
scribed her experience as "three years of fighting to 
keep my children from freezing from lack of heat, 
sitting up sometimes all night to keep the rats from 
biting one of my babies, or just checking to make sure 
we weren't visited in the night by uninvited guests." In 
explaining the causes of these conditions Stamps 
observed: 



Anytime thousands of people are confined to small areas of 
land and stacked and herded on top of each other like 
animals, that place ceases to be a home but instead becomes 
and is a concentration camp. The guards and keepers that 
patrol such camps come in the guise of social workers, 
politicians, police, medical practitioners, and even some of 



Such observations led Robinson to conclude that "I 
think the idea of integration in housing, although a 
good one, should give way to quality housing wherev- 
er it might be." As Ron Stevens noted, a first step 
called for by many is simply to tear down existing high 
rise public housing complexes. 

DeMarco anticipated the concerns with freedom of 
choice and political power in his remarks. He respond- 
ed that people have long had the right to choose 
segregated housing but rarely the right to choose an 
integrated neighborhood. And he concluded, "if segre- 
gation empowered people, minority people would be 
damn powerful now." 

In light of the nation's housing crisis, President 
Reagan's Commission on Housing was created. The 
principal findings and recommendations of that Com- 
mission's report, released in April, conflict with the 
major conclusions presented to the Illinois Advisory 
Committee. In striking contradiction to most partici- 
pants at the December consultation the President's 
Commission denies that nationwide the condition or 



supply of the housing stock poses a major problem, 
while acknowledging exceptions in certain communi- 
ties. And while a general commitment to fair housing 
principles and compliance with existing fair housing 
laws is frequently asserted, among the more than 100 
recommendation, none address specific changes to 
improve current enforcement efforts. Unlike most of 
the participants at the consultation, the President's 
Commission does not discuss the need for stronger law 
enforcement, better educational or training programs, 
tenant organizations (in fact rent control would be 
explicitly prohibited under some of the proposed 
programs), or any of the proposals which were 
emphasized at the December meeting. 

What is emphasized in the Commission's report are 
the costs of home building and home buying. In its 
press statement announcing the release of the report, 
the Commission stated: 

Repeatedly in its work the Commission came face to face 
with the current plight of housing: young couples who 
cannot find a first home they can afford to buy; low-income 
families compelled to spend more on housing than they can 
afford; builders facing bankruptcy; unemployed construction 
workers; mortgage lenders hobbled by past government 
policies and regulations. 

The report's major recommendations call for replacing 
low income construction programs with a housing 
payment program, regulatory relief in several areas to 
encourage the production of more and new forms of 
housing (e.g., condominiums, cooperatives, manufac- 
tured homes), and tax incentives to increase the flow 
of money into the housing industry and the housing 
choices of Americans. Denis Marino's response to the 
Commission's interim report applies equally to the 
final report: "There is a complete failure to acknowl- 
edge considerable evidence of historic institutional 
discrimination which limits housing choices." 

The most fundamental distinction between the 
thrust of the Illinois Advisory Committee's December 
consultation and the Presidential Commission's report 
involves a broader question of the function of housing 
in our society. For the participants at the consultation 
the need for shelter is the principal concern. To the 
Commission the primary problem is the economic 
condition of the housing industry. Perhaps the most 
revealing statement is the following directive given to 
the Commission in the Executive Order which created 
it: 

. . .seek to develop housing and mortgage finance options 
which strengthen the ability of the private sector to maximize 



opportunities for homeownership and provide adequate, 
shelter for all Americans (emphasis added). 

It is important to note that the objective is not to 
maximize opportunities for homeownership and pro- 
vide adequate shelter for all Americans. The objective 
is to strengthen the ability of the private sector to 
accomphsh these objectives. 

As Ron Stevens asserted, and several other partici- 
pants implied, it is precisely this basic approach to 
housing that constitutes the fundamental flaw in 
housing policy today. In Stevens' words: 

When housing is discussed within the private sector, it is 
discussed in terms of market. The problems tend to be 
defined not in terms of public need, but rather in terms of 
private benefit. The problems are seen through the eyes of 
the investor, the develojjer, the builder. These actors share a 
common interest: maximized profit which requires higher 
rather than lower cost to the consumer. 

We must begin, even in the private sector to perceive 
housing as a long-term public investment, not a short-term 



private one. The solutions to the short term interests of 
investors today are diametrically opposed to the long-term 
interests of society. The private sector has not only failed to 
solve the housing problems through its reliance on "free 
market" forces, it has either created the crisis we are 
beginning to experience, or it has at the very least badly 
exacerbated it. 

Chicago's house is divided. Much of it is burning 
down, some is just falling down, and more should be 
demolished. A major rebuilding job is ahead of us, one 
which involves far more than brick and mortar. We 
are a long way from the nation's expressed goal of a 
decent home and a suitable living environment for 
every American family. We are even further away 
from the goal of equal housing opportunity and 
genuine freedom of choice for every American family. 
The incisive analyses and recommendations contained 
in the following papers are worthy of the most serious 
consideration by public officials and private citizens 
ahke. 



Chicago's Housing: A Photographic Essay 

Chicago faces no long range civil rights problem 
larger than the one which flows from entrenched 
housing discrimination. This consultation discussed 
that problem and made suggestions for solutions 
which might be pursued by governmental authorities 
at the national, state, and local levels or by individuals 
or groups of citizens. The provocative papers and 
timely testimony from public housing residents, com- 
munity organizers, researchers, lenders, scholars, and 
public officials can profit not only Chicagoans but also 
concerned citizens elsewhere in the nation.* 

Chicago calls itself "a city of neighborhoods," but 
all neighborhoods aren't equal. Some may look alike, 
but the lakefront condominiums of North Michigan 
Avenue are worlds away from the towering Robert 
Taylor Homes, the public housing warehouses along 
South State Street. There 30,000-plus people, nearly 
every one black, live in a city strip about three miles 
long and one super block wide. Taylor's grilled 
balconies (to keep children from falling out of their 
"homes") and concrete galleries resemble prisons 
more than high-rise apartments. The persistent com- 
plaints about broken elevators are not laughing 
matters — not to women and children who must pass 
ghastly gargoyles and obscenities drawn on the stair- 
well walls. Artful murals may brighten the streets of 
Chicago's ethnic "neighborhoods," but it is vicious 
graffiti scrawled on the sides of people's houses by 
street gangs that says what is going on in Chicago's 
House Divided. 

Approximately 142,000 people are registered in the 
city's public housing, the most celebrated project 
being the 20-story "gun towers" of the Cabrini-Green 
complex where Mayor Byrne attempted to live last 
spring. Before the mayor moved in, there was more 
garbage in the "garden apartments" of Cabrini than 
vegetables in the big field where some tenants grew 
"greens." Some evictions— in the name of law and 
order — followed the mayor's sojourn, but the compo- 
sition of the 12,000 black tenants of Cabrini-Green did 
not change much. It is still 80 percent occupied by 
husbandless mothers and fatherless children. 



• Tom Pugh. Chairman of the Ilhnois Advisory Committee to the 
U.S. Commission on Civil Rights, opened the consultation with a 
presentation of color slides he took of housing conditions in 



With more than ten percent of Chicago's 1.2 million 
black population in public housing — and 97 percent of 
the 17,988 families on waiting lists also black — little 
attention is given to the housing needs of poor 
Hispanics and whites. Continuing segregation in 
housing — 17 of the city's 77 "community areas" are 
more than 95 percent black and there are 31 "commu- 
nity areas" which are almost all white — is a particular 
problem not only to blacks but also to the city's 
Hispanic population which is approaching the half 
million level. Both of these large minorities are being 
limited to particular neighborhoods by the discrimina- 
tory patterns of public housing location and real estate 
sales and rentals. 

The suburban communities of Oak Park and Park 
Forest, which have acted successfully to reduce scare 
selling and "block-packing" which have so dominated 
Chicago's housing market, are proofs that Chicago 
itself need not let the practices which have wracked its 
south and west sides scar the rest of the city. Efforts 
can be mounted on a grand scale to transform 
Chicago's "community areas" into open housing areas 
where minorities can freely live. 

The locked iron gates which block streets between 
southside blacks and Bridgeport whites should be 
dismantled. Chicago needs to see what a "House 
Divided" it really is and do something about the 
atrocious conditions in its public high-rise projects. It 
has been a long time since we quit building them — 
federal law prohibited letting children live above the 
third floor in "new" units back in 1968. Perhaps 
consideration should be given to demolishing the 
Taylor and Cabrini-Green complexes as St. Louis did 
in the case of its smaller Fruitt-Igoo project. 

Chicago has some excellent areas where everyone is 
black or everyone is Hispanic or everyone is white, but 
most of the people of these neighborhoods turn their 
backs to people of the other neighborhoods. Perhaps 
this consultation can help them face each other and 
recognize that segregation is at the root of the 
majority of America's remaining civil rights problems. 

Chicago. This statement and photographs present a summary of his 
remarks. 



The Residents 



Marion Stamps on Cabrini*Green 

by Marion Stamps, Tranquility Memorial Community 
Organization, Former Resident, Cabrini-Green 

My name is Marion Stamps. I am the mother of five 
daughters, ages 19, 18, 16, 13 and 10. I am also the 
proud grandmother of a 10-month old grandson. 

I moved into Cabrini-Green Public Housing Project 
in 1965. For the next eleven years I made this my 
home. I was a young mother, new to the city, having 
only lived in the city 3'/; years before becoming a 
public-housing resident. The move into public-hous- 
ing, I thought, was a godsend, a blessing, compared to 
the slum-housing I was living in before. For me the 
move into Cabrini-Green represented something big- 
ger and better. 

That was how I felt in 1965, after 3 years of fighting 
to keep my children from freezing for lack of heat, 
sitting up sometimes all night to keep the rats from 
biting one of my babies, or just checking to make sure 
we weren't visited in the night by uninvited guests. 
That was 1965. My how dreams are shattered by 
reality. 

My family and friends were the first to take a stab at 
shattering my dreams of a better life at Cabrini-Green. 
They offered me a laundry list of Do's and Don't's 
necessary to survive in public housing: 1) don't speak 
to your neighbor 2) don't offer any help or assistance 
to your neighbor 3) don't visit your neighbor's house 
4) don't hear, speak, or see no evil and 5) do mind 
your own business. If you follow these simple rules, 
they said, you shouldn't have any problems living in 
public housing. 



My first year and a half of living in Cabrini it was 
easy to follow these simple rules. I worked during the 
day and went to school at night. This didn't leave 
much time to mix and mingle with neighbors. How- 
ever, even these hours didn't keep me from feeling that 
something was seriously wrong in what I thought was 
a better place for me and my children. It didn't take 
me long to find out just what the problems were. All I 
had to do was take off work one day, step out on the 
ramp (porch) and there it was. I was both amazed and 
saddened to realize that my haven was no more than a 
living hell. I had never seen so many people, primarily 
women, walking around with their heads down, in 
states of total hopelessness. I saw young children 
fighting to get a chance to play on the only remaining 
swing left in a concrete playground. I saw young 
children I knew who should have been in school, but 
for some reason were allowed to just hang out in the 
school playground. I remember asking myself why are 
these children allowed to hang in the school play- 
ground and not go to class. I didn't know much about 
the school (Schiller) at that time because my children 
were attending a neighborhood Catholic school. 

That day, standing on the ramp, seeing my dream 
shattered by the apparent reality of hopelessness, 
shocked me into a realization of what I had to do. I 
could no more live in Cabrini and not get involved 
than I could live in Mississippi and not get involved. I 
made a decision that day to do two things: 1) to get to 
know my neighbors who lived to the right and left of 
me and 2) to find out what kind of programs were 
available in the building to help the residents. I was 
not really surprised to find out from my neighbors 



that there weren't any programs in the building. I was 
told, though, that there was a community organization 
called North Central Committee Council (NCCC). 

The NCCC was established to work with tenants as 
a liaison between tenants and management. I decided 
to get additional information on this group and find 
out how we could get some kind of program for my 
building. After attending about three meetings of the 
NCCC, I learned that it was really a tenant council set 
up by CHA (Chicago Housing Authority). The 
building I lived in did not have representation on this 
tenant council. I took it upon myself to try to get 
tenants involved in the building council. This became 
my first major organizing effort at Cabrini-Green. It 
didn't take me long to learn that many of the tenants 
also lived by the same laundry list of do's and don't's 
that my family had bestowed upon me. This hampered 
my organizing efforts. I analyzed the situation and 
drew upon my experience in the civil rights move- 
ment. It didn't take me long to figure out why my 
efforts at organizing a building council were unsuc- 
cessful. In order to organize people one must be able 
to clearly define the issues or problems. Once this is 
done, one must be able to offer some direction or how 
to handle the issues and/or solve the problems. This 
has to be done, though, from an historical framework 
of reference of the issues and problems at hand. 
Therefore, it was necessary for me to first get an 
understanding of the history of public housing. Such 
an understanding, I felt, would certainly unveil the 
perpetrators of despair who had driven the residents to 
their present states of hopelessness: the planners, the 
architects, the developers, etc. 

Cabrini sits on 70 acres of land that houses, when in 
full capacity, 14,195 people. It is bounded on the 
North by Clybourn Avenue; on the South by Chicago 
Avenue, on the West by the Chicago River; and on the 
East by Division Street. Within the housing project are 
two parks (Stanton Park and Seward Park). These 
parks are maintained by the Chicago Park District. 
There is also a youth center (Lower North Center) 
operated by the Chicago Youth Centers. In 1968 there 
were ten social service agencies housed in and around 
Cabrini-Green. Police, of course, were also there to 
insure the protection of the many who came and went 
in and out of Cabrini on a daily basis. 

As I reflected upon Cabrini's history and its present 
make-up, the causes of the problems there became 
clearer. Anytime thousands of people are confined to 
small areas of land and stacked and herded on top of 
each other like animals, that place ceases to be a home 



but instead becomes and is a concentration camp. The 
guards and keepers that patrol such camps come in 
the guise of social workers, politicans, police, medical 
practitioners, and even some of us. Their roles are 
clearly defined by the establishment for which they 
work and owe their allegiance to: to insult, degrade, 
disrespect, harass, and to generally make to feel 
inferior, all residents you come in contact with. 
Thereby, social workers question your man and 
womanhood and think nothing of it. Politicians make 
promises of jobs and welfare checks for your votes or 
no jobs and no welfare check if you don't vote the way 
the precinct captain has dictated. Then we have 
Chicago's finest, the police who only serve and protect 
property and property rights; who constantly remind 
you, with their guns drawn, their foul mouths spitting 
derogatory remarks about your mama, that you are in 
a concentration camp and they are assigned keepers 
and guards. Let us not forget the all mighty doctor 
who for some reason is convinced that the only 
medical problem of Black and poor people is a mental 
one. Thereby he keeps us drugged from one day to the 
next. Lurking amongst all of these outsiders, let us not 
forget us: the misguided Black folks among us who sell 
dope to our children, who intimidate and force our 
children into gangs and who generally harass our 
children. These misguided Black folks' only concern is 
making a buck, using and misusing other people. They 
make an already bad situation worse. The sad part 
about it, though, is that they themselves don't even 
realize that they too are victims in the concentration 
camp and they too will perish unless they wake up and 
clean up their act. 

Having gained this kind of understanding of the 
historical context of public housing, I set out to 
resume my organizing. I began by having a few 
women in the building to come together in a rap 
session. From these sessions we identified two major 
issues in which we would become involved: the youth 
gang situation and the problems at Schiller School. A 
group of parents, evolved from work on these two 
issues, who became actively involved in the building 
council. They gained a new sense of self-awareness and 
belonging. In fact, this group was so successful with 
the Schiller school situation, that our next organizing 
effort was very easy. 

It came at a time when everyone in the community 
was predicting doom. The issue was the ever-increas- 
ing youth (gang) groups. By this time our work and 
involvement in the community had pushed us into 
roles as community leaders. Like it or not, the 



8 



community saw this as our role. So now the communi- 
ty expected us to do something about the gang 
problem. It was crucial in dealing with this problem 
that we not fall into the trap of blaming the victim. 
For certainly the young people who were involved in 
the youth gangs were victims whether they realized it 
or not. They were victims like the rest of us of a cruel, 
inhumane, unjust, and oppressive society. A society 
that sees their suicidal activities as benefiting its own 
destruction of our race. 

We saw our first task in addressing the youth 
groups as talking to leadership of the groups. This was 
not an easy task. But we felt it was necessary to get 
from the "horses mouth" what their concerns were. 
However, after many attempts to set up meetings with 
them, they finally agreed to one. Their concerns were 
nothing we had not already heard from other young 
people who were not affiliated with the gangs: lack of 
recreational facilities, lack of jobs, irrelevant educa- 
tion. We agreed to set up weekly meetings with the 
youth groups to try to find more positive ways of 
channeling their energies. We had our ups and downs 
in getting the youth involved in community projects 
and developing a more positive image in the communi- 
ty of them. It was clear to everyone that we were 
making progress, but our success was short lived. 

In 1971 two policemen were killed in Cabrini. With 
the killing of the two policemen all hell broke loose. 
Our community became a war zone with the police- 
men breaking down doors, intimidations, harassments, 
arrests. It was a living hell. Following the killings then 
Secretary of HUD, George Romney, visited Cabrini- 
Green to talk directly to the tenants. To insure that 
Sec. Romney heard the real story our group mobilized 
tenants to attend the meeting. The meeting was held at 
St. Dominic's Church. Resident after resident testified 
before the Secretary at that meeting. They testified 
about the deplorable living conditions at Cabrini and 
the sense of hopelessness. The Secretary was moved by 
what he heard and at that time made a commitment to 
see to it that tenants would be involved in the decision 
making process in public housing. What followed as a 
result of that was the establishment of clear cut 
guidelines on tenant participation. CHA, though, like 
other housing authorities across the country, wasn't 
about to give up its powers without a struggle. Hence 
the fight for tenant involvement began in Chicago. 

Public housing residents from all over the city came 
together under the banner of Chicago Housing Ten- 
ants Organization (CHTO). After a year of fighting 
CHA, the Federal government threatened to freeze 43 



million dollars in modernization funds. This was the 
straw that forced the CHA to the binding arbitration 
table. There were several meetings with CHA, CHTO, 
the Central Advisory Council, and the American 
Arbitration Association. The result was the Memoran- 
dum of Accord. It spelled out how tenants would 
participate in all aspects of public housing affairs, as 
well as, the process by which local and central 
advisory councils would be elected. While CHTO had 
indeed won the battle in this case, we had lost the war. 
We lost the war because we were politically naive. We 
didn't understand the kind of power we had. We did 
not realize that if we controlled the local councils in 
CHA, we would have the support and backing of 
180,000 people in this city. The politicians very clearly 
understood this though. They understood that we 
thereby represented a very dangerous threat to the 
city. They tried to pull out all the plugs to insure that 
their hand-picked flunkies got elected to as many of 
the advisory council seats as possible. When the 
elections were over, CHTO representatives had only 
been elected to 7 of the 18 public housing develop- 
ments in Chicago. The price of CHTO's political 
naivety is apparent now, today, in 1981. 

The situation in Cabrini-Green is worse now than it 
was in 1965. Community activists have either moved 
or been forced out (like myself) or have sold out to the 
establishment completely. Those that do none of these 
things have fallen back into a state of hopelessness. I 
have not given up though. Many of us have hung on in 
there. Myself, along with Cabrini-Green residents and 
other community people, organized the TranquiHty 
Memorial Community Organization in 1975. It was 
organized to continue our organizing work on the 
Near Northside and especially in the Cabrini-Green 
housing development. We were the only group that 
opposed the politically-motivated move of Mayor Jane 
Byrne into Cabrini-Green. We represented over 60 
tenants who were faced with eviction as a result of the 
Mayor's move into Cabrini. We won 59 of these cases; 
one case is still pending. Tranquility was also responsi- 
ble for setting up political education classes for 
residents of Cabrini and the Near Northside. These 
classes were set up to help the residents define and 
analyze for themselves why the poor conditions are 
allowed to exist in Cabrini and throughout the city. 
We hope they come to the realization that the 
situation in Cabrini-Green and the many other con- 
centration camps across the city, is by design and not 
by accident based on the question of who shall control 
the land. 



The Struggle continues. Only when public housing safe and sanitary housing housing is a right, not a 
residents are able to define for themselves the standard privilege, only then will conditions in Cabrini-Green 
by which they must live, and recognize that decent, and other housing projects change. 



10 



Public Housing in the City of Chicago 

by Jerome Hunt, Resident, Dearborn Homes 
(Dearborn Homes is part of the public housing project 
that includes the Robert Taylor Homes) 



The purpose of this paper is to discuss the living 
conditions in a public housing complex, how tenants 
have attempted to resolve their problems, and recom- 
mendations for improving public housing. This paper 
represents my beliefs as a resident of public housing. 

Babies crying. People dying. Elevators not working. 
Damn near half of the population is on dope. These 
are some of the first thoughts that touched my mind 
when I think of the living conditions in Dearborn 
Homes. 

Dearborn Homes was built in 1949. My aunt and 
uncle moved over here in 1950. They said that it was a 
beautiful development. I was 10 years old then and it 
didn't look beautiful to me, but it was better than the 
rat infested old slum buildings that were so familiar to 
most blacks who had come from the South to live in 
Chicago. When I was about 12 years old I was visiting 
my aunt and uncle. I was sitting on the bench enjoying 
the summer breeze when two older fellows came to me 
with guns out looking for someone who lived in the 
development. When I went upstairs to explain this to 
my aunt she could not believe it. One of the biggest 
problems in public housing is the use of dope by young 
people, and when these people can not get the 
narcotics because of lack of money, they start robbing 
and burglarizing the residents within the development. 

Then we have the problem of the gangs. These are 
mostly young boys and girls who have dropped out of 
school for one reason or another and cannot find 
employment. They terrorize the older people and the 
young school kids. Young mothers who are the head 
of the household are afraid for lives and the well being 
of their kids. The community tried to have a skating 
program for the kids during the summer months while 
school was out, but because of the shooting by the 
gang members and the fights we could not continue 
this program. The parents are afraid to send their kids 
to school, afraid to send their kids to the store and are 
generally afraid because of the place where they live. 

When you live in a high-rise building it is very 
important that the elevators work. Elevators in public 
housing are a major problem, not because these 
elevators are broken down by residents, but because 
the elevator companies are allowed to make millions 
of dollars on repairs. But they do not make those 



repairs, nor do they do basic maintenance work to 
keep the elevators working. 

Today about 40% of public housing apartments are 
rented out to young unwed mothers. Most of these 
young ladies have not finished high school and cannot 
support the children that they have. Another 40% of 
the residents are older women, heads of households 
and were born in the South with very little education. 
Their children are now raising children in public 
housing and on aid. The other 20% of the residents 
consist of families with both a father and a mother. 
Most of them are working and have managed to pull 
themselves up to some economic stability in the 
community. Under the Reagan administration some of 
these people are now being asked to pay an unreason- 
able amount of rent to continue to live in public 
housing. 

Maintenance service has been cut drastically. Gar- 
bage compactors that do not work properly are 
bringing more rats and roaches in the building. The 
stench around the compactors in the summertime is 
unbearable. Janitorial service has been cut back. 

The Housing Authority now has a program to 
remove problem families. Where do these families go? 
Where did they come from? To me these families came 
from institutions of racism: the economic institutions 
of racism, the southern states, which did not allow 
these people to earn a decent living, did not allow 
these people to own land, did not allow these people to 
vote, and did not allow these people to be citizens of 
this country; the educational racist institutions, which 
did not allow these people a decent education and did 
not teach these people how to live and work in an 
industrial society; the religious racist institutions, 
which did not preach the gospel that all men are equal 
and free in the eyes of God, would not allow blacks in 
their churches and failed the country as a whole by 
denying a rightful place for some of its children. 

Blacks came to the North looking for a better place 
to live, a better place to raise their children and found 
a situation that was more devastating than the place 
they had left. We did not hear of blacks participating 
with dope, committing suicide and abusing their kids 
until they started dealing with the conditions in the 
North. 

If conditions in Dearborn Homes and throughout 
this country are going to change, it will have to be 
through an educational institution that is geared to 
bring the ability of the poor out of the dark ages. It 
would have to be economical institutions that are 
willing to make people their most important product. 



11 



It will have to be with religious institutions teaching 
Christianity and respect for all men regardless of race, 
creed or color. 

Conditions in my development will not change until 
the institutions that surround us change their attitudes 
and recognize that they cannot continue to exist if 
they have not planted a shade tree where they know 
they will never lie. 

How Tenants Have Attempted to Resolve Their 
Problems 

During the civil rights struggles in the 1960s, there 
were attempts by residents who lived in public housing 
to form a city-wide organization. One after the other 
these organizations failed. Then the Chicago Housing 
Tenant Organization (CHTO) was formed and this 
organization was successful in forcing the Chicago 
Housing Authority to set up tenant organizations 
throughout the city (Local Advisory Councils). 

One of the big issues at that time was how 
modernization monies were to be used. Under the 
modernization program set up by the Federal govern- 
ment tenants were supposed to participate in decision 
making. This was one of the key factors in bringing 
about resident involvement. Companies that contract 
with the authority were now obligated to hire some 
residents during the course of their contract with the 
authority. 

Another issue was the late charges added on to rent 
payments. Welfare recipients that lived in public 
housing were being charged by the Housing Authority 
$15.00 extra each month because they were receiving 
their welfare checks in the middle of the month and, 
therefore, were not able to pay their rent at the 
beginning of the month. When we looked at the 
Illinois law it clearly stated that two agencies could 
not have conflicting policies that would result in 
hardship for the recipient. Therefore, we were able to 
get the Housing Authority and the welfare department 
to come to an agreement that would not inconvenience 
the recipient. The authority now has a dual rent 
schedule to accommodate recipients that receive their 
checks in the middle of the month and the $15.00 late 
charge has been abolished by the authority. 

A third and still unresolved issue is the inadequacy 
of laundry facilities. Most apartments throughout the 
Housing Authority are not set up for washing facili- 
ties. Therefore, it was necessary for the authority to 
have washing facilities available for residents in a 
common area. When the facilities were set up by the 
authority there were no provisions made for a laundry 



room attendant and the machines were constantly 
vandalized. This problem went on for a few years and 
cost the authority unnecessary expenditures. 

The resident organizations were able to set up new 
facilities and keep them going with the help of 
modernization funds. One of the major problems that 
faced the laundry room program throughout the 
authority at this time was not having qualified 
repairmen to keep the machines running properly. 
Most repairmen do not want to work in public 
housing. This is a problem that must be resolved in 
order for residents to continue washing in a common 
facility. If this problems is not resolved, residents will 
start washing in their apartments and this will bring 
about a plumbing problem. The cost could be astro- 
nomical. It is mandatory that the situation be re- 
solved. 

Lack of elevator maintenance is another unresolved 
problem. Anytime you live in a high-rise building it is 
mandatory that you have a decent transportation 
system. In the Chicago Housing Authority elevators 
are a major problem. This problem has been brought 
on because no basic maintenance work is being done 
on elevators and vandalism to the elevators by 
residents is prevalent. 

At this time there is an effort by the resident council 
and the new administration to resolve the elevator 
problem. But the new administration is making the 
same mistakes as the old administration by not 
involving residents in the decision making process. In 
addition, it is spending close to a half a million dollars 
a month for the elevator program, far more than is 
necessary. Elevator crews should be cut down to 
approximately twenty crews. This would cut the cost 
in half Each crew should be assigned a specific route 
of approximately twenty elevators apiece, then the 
authority would be in a position to spot check the 
elevator repairman's work. The authority could then 
monitor the performance of each crew by the work 
tickets that are turned in on a daily bases. Until the 
authority take these steps, we will continue with an 
elevator program that is not cost effective. 

Another concern is the high cost of housing. The 
Brooke Amendment was intended to help very low 
income people pay their rents; it only allowed the 
Housing Authority to charge 25 percent of a resident's 
income. When you move into public housing you must 
qualify by the amount of income that you receive. 
Some people are fortunate enough to bring their 
income up to a livable standard, but cannot afford to 



12 



go out into the private market at this time because of 
the high interest rates. 

Now the Chicago Housing Authority Board of 
Commissioners with the consent of the Mayor has 
seized this opportunity to raise some people's rents as 
much as five and six hundred dollars a month when it 
only cost the authority $238.00 to maintain the 
average unit. Why would they force people to pay this 
type of rent? It is not the responsibility of average 
income people to subsidize public housing, but basical- 
ly this is the position that these people are put in. It is 
my belief that if this problem is not resolved in the 
near future that it will be an issue in the 1983 mayoral 
elections. 

Security in public housing has been a problem for 
years. The problem is even worse in some senior 
housing buildings, where no security guard program is 
in effect. This month the housing authority announced 
that the Chicago Police Department will take over 
security in public housing. We can only hope that the 
situation gets better. Another problem is the lack of 
night emergency service. Some of the major problems 
that occur after 4:30 p.m. are inadequate elevator 
service, fires in the apartments, fuses blowing out, loss 
of keys to apartments, busted water pipes and no heat. 
The authority has set up various programs to combat 
this situation, but most of these programs have not 
been successful; for instance, the night elevator pro- 
gram, where 60% of the elevators down at night are 
not repaired. This causes a great inconvenience to 
residents. When a person's fuses go out in the 
apartment and he or she does not have access to the 
prime room, where the main fuses are, this in an 
inconvenience. The only way public housing in the 
city of Chicago will have a successful night emergency 
program will be to set up a night department to deal 
with emergencies. This department must be complete- 
ly controlled by the authority. 

Another current issue in public housing is problem 
families. The housing authority and residents have 
recognized the problem families for some time and 
now have decided to take some action. A committee 
on problem families was established about one and a 
half years ago, to make recommendations to the 
Commissioners for improving the screening and evic- 
tion of problem families. The committee consists of 
representatives from Central Office Management, 
Local Management Offices, and the Central and Local 
Advisory Councils. The committee agreed to a two- 
phase approach in carrying out its assignment: The 
first phase covers recommendations for improving the 



screening and eviction of undersirable families. The 
second phase deals with recommendations for helping 
existing CHA families overcome their problems and 
thus avoid evictions. 

After the committee completed the first phase of 
this assignment, a copy of the committee's report was 
sent to all LAC Presidents. Any comments in the list 
of recommendations were to be submitted to the 
Central Office Management Department by August 
22, 1980. The committee then started working on the 
second phase of this assignment for helping existing 
families overcome their problems and thus avoid 
evictions. A copy of that report was sent to the LAC 
Presidents for their comments, (see appendix I for a 
copy of that report and subsequent communication 
between the committee and the CHA). 

Only time will tell if we are able to solve the 
problem of problem families in public housing. But for 
those families that are evicted, they still have a 
problem. With major cut backs by the Federal 
government in social programs, what agency will now 
be able to assist these families? To what extent will 
these problem families effect society in the future? 

Yet another problem is the high cost of labor for 
maintenance purposes with the severe cut backs in 
Federal spending and the high cost of union labor, 
public housing in the city of Chicago will have to find 
a more reasonable cost effective alternative for its 
maintenance problems. Contractors and craftsmen 
have done very poor maintenance work in the past and 
because of the political climate these practices have 
almost destroyed public housing in the city of Chica- 
go. Appendix II contains a letter from the Department 
of Housing and Urban Development echoing this 
problem. 

Insect and rodent control is another concern. A few 
years ago the housing authority closed down its 
incinerators and installed compactors throughout 
public housing. The residents were told that because of 
the Federal environmental laws, this was necessary. 
When compactors started being installed in various 
housing developments it was learned that officials of 
the housing authority owned the company that was 
installing the compactors. Most of these compactors 
have given the authority trouble since they have been 
installed. Because of this situation insects and rodents 
are now a major problem throughout the authority. 
This problem we still do not have a solution for. 



13 



Recommendations For Specific Programs To Make Public housing throughout the country has been a 

Public Housing Livable patronage program at the national level for craft 

1) Politics should be taken out of public housing. unions. Millions of dollars have been wasted. It is time 

2) Residents should have control. for families that live in public housing to control 

3) Federal subsidies should go directly to residents where they live. This is what the Republic of the 
of public housing. United States of America stands for. Self-determina- 

4) Residents should be able to purchase public tion, and self-dedication by the families in public 
housing. housing would make public housing livable. 



14 



The Organizers 



Tenants Organizing for Stable 
Neighborhoods 

by Ralph Scott and Karen Walker, The Hyde Park 
Coalition on Housing and Tenant Rights; Mosi 
Kitwana and Bob Adams, The Housing Agenda; 
and Hans Hintzen, Leadership Council for Metro- 
politan Open Communities 

Introduction 

Chicago's dual housing market, with its pattern of 
residential segregation and rapid racial change has 
been studied at length by a wide variety of observers 
and participants, most often with an emphasis on 
working toward an integrated market for single 
family, owner occupied housing. But the damage 
caused by separate and unequal housing opportunities 
for low and moderate income. Black, and Hispanic 
Chicagoans is not limited to that shrinking minority 
who can afford to buy homes. Renters have also been 
hit by what we will describe as a cycle of racial and 
economic changes which can be observed in one state 
or another in any one of many neighborhoods where 
the vast majority of the residents are tenants. 

In these dark ages of high interest rates and low 
housing starts many people who formerly cherished 
the dream of owning a house with a lawn and a two 
car garage can now look forward to a long if not 
permanent period of renting. For many others, it is 
not a matter of losing a dream, but of finding an 
apartment that is warm and safe and still having 
enough money left after paying the rent to buy food 
and clothing. Hundreds of thousands of people must 
search for safe and affordable housing for months or 



even years, with no assurance that once they succeed 
they will not have to start over again with the next 
round of condominium conversions or high-rent 
rehabs. Increasing numbers of tenants competing for a 
decreasing supply of rental housing may soon make 
Chicago the equal of Boston or New York in at least 
one respect, the high cost of housing. 

For Black and Hispanic renters, the problem is 
compounded by the fact that large areas of the city 
and suburbs are closed to them. They are left with the 
choice of living in neighborhoods that have been 
abandoned or neglected by white property owners, 
and now suffer from the economic and social ills that 
are often wrongly identified with "minority communi- 
ties", or of facing subtle discrimination or overt 
hostility from racist property owners and managers in 
all-white neighborhoods in order to get the best 
possible home for their money. 

When a white neighborhood composed of moderate- 
ly priced multi-family rental housing begins to "open 
up," temporarily participating in both sides of the dual 
housing market, the increased demand for apartments 
causes a corresponding increase in rents. The rising 
rents along with the departure of those white tenants 
who flee to the next adjacent closed community begins 
a cycle of rapid tenant turnover. 

The white property owners, who have long since 
moved from the neighborhood, either sell their build- 
ings for fear of incurring a loss or refuse basic 
maintenance service to their increasingly mobile ten- 
ants. A period of real estate speculation and deterio- 
rating building conditions follows in which the struc- 
tures are bought and sold as tax shelters or on the 



15 



gamble that the neighborhood will be "revitalized." 
This may go on for some time until the neighborhood 
is "regentrified" by buyers who convert their buildings 
to luxury apartments or condominiums, or, in special 
cases, by larger urban renewal projects involving 
massive infusions of state and federal funds. 

Thus the dual housing market meshes with the 
economic conditions of the low to moderate income 
tenant community in a cycle of escalating rents, 
deteriorating living conditions, and forced displace- 
ment. The tenants, black, brown, and white, are 
pushed from the lake, from the park, or from the 
boulevard, into an even tighter space between the 
inner-city upper-middle class and the outer-city and 
suburban middle class communities. 

Because they lack the economic and political power 
to make their concerns felt at city hall or in the state 
legislature, tenants must organize themselves to break 
through the circle of the unstable neighborhood. By 
joining with other renters in their buildings, they can 
overcome differences in outlook and ancestry to take 
responsibility for their living situation. As they orga- 
nize, they learn more about the legal and economic 
problems that confront them, and what or who is 
creating them. 

Sometimes the tenant organization may succeed in 
stopping a rent increase, or in getting badly needed 
building repairs done, but more often the leaders of 
the group will be evicted, and the rent strike will fail. 
In the following section, we will look at a tenant 
organization in the Hyde Park neighborhood of 
Chicago for Specific examples of organizational solu- 
tions to tenants' problems. 

Hyde Park Background 

Chicago's Hyde Park neighborhood is an excellent 
example of a community that has undergone, within a 
relatively short period of time, the cycle of racial and 
economic changes that we have described. 

Hyde Park was established as a suburb of Chicago 
in the late 1850's. The Illinois Central Railroad soon 
began to serve the area, and in 1861 the town of Hyde 
Park was incorporated. At this time, the town of Hyde 
Park included a much larger area than the neighbor- 
hood covers today. 

At first, Hyde Park was composed of large homes 
and estates. However, lots became smaller with 
continuing subdivision, and the population grew. In 
1889, Hyde Park was annexed to Chicago. 

The Columbian Exposition of 1893 dramatically 
changed the area that we call Hyde Park today. Before 



the Exposition, the community brought the building of 
apartments, rooming houses, and hotels. This develop- 
ment continued into the early 19(X)'s. 

In 1893, the University of Chicago moved to Hyde 
Park, and a residential area grew up around the 
university for faculty and staff. 

By the 1920's most of the housing that exists today 
had been completed. The population of the Hyde Park 
neighborhood was 37,523, mostly Irish, Germans, and 
Russian Jews. 

After 1920, for many years, Hyde Park became the 
home of increasing numbers of transients. The popula- 
tion increased further, and these additional people 
were accommodated mainly by converting apartment 
buildings to rooming houses containing more, smaller 
units. 

World War II and the lack of building materials 
resulted in poor maintenance of many of Hyde Park's 
buildings through the early 1940's. This, and the 
cutting up of apartments and homes into smaller units 
led to areas of blight. 

Blacks began entering the neighborhood in the 
1940's, with the pace accelerating after 1948, when the 
U.S. Supreme Court outlawed the use of restrictive 
covenants in the transfer of real estate. Such covenants 
had been used for years to keep Blacks out of the area. 

The influx of Blacks brought dramatic changes. 
Large apartments and homes continued to be convert- 
ed to smaller units. The population increased sharply, 
with many whites leaving the area, and an even 
greater number of Blacks moving in. 

In response to "blockbusting," illegal conversions of 
buildings to rooming houses, and physical deteriora- 
tion, the Hyde Park-Kenwood Community Confer- 
ence (HPKCC) was formed in 1949. Its objectives 
included prevention of building deterioration in the 
community, and improvement of race relations. 

There was much opposition to the HPKCC's desire 
for integration from property owners, business people, 
bankers, business based service clubs, and the Univer- 
sity of Chicago administration. In May of 1952, the 
Southeast Chicago Commission (SECC) was formed. 
The SECC was initiated, funded, and controlled by the 
University of Chicago, and, to a lesser extent, by area 
business interests. This organization began to more 
clout than the HPKCC had been able to achieve. 

With strong University of Chicago input, a complex 
body of law was enacted by 1954 to set up the urban 
renewal machinery at the city, state, and federal levels 
as quickly as possible. The University of Chicago and 
the SECC set up a planning unit housed at the 



16 



university in 1954 to begin receiving grants to develop 
plans for a physically attractive, well-serviced, non- 
discriminatory community where people with similar 
standard would live. 

Work began almost immediately on plans calling for 
the clearance of dozens of acres of land in Hyde Park, 
including about 20 percent of all of the community's 
housing. It was not until November of 1958, however, 
that the Chicago City Council approved the Hyde 
Park plan. 

The plan had the support of the HPKCC, but a 
group calling itself the Hyde Park Tenant and 
Homeowners Association, which drew much of its 
support from the Black areas of Hyde Park marked 
for demolition under the plan, actively opposed it. 

The implementation of urban renewal continued 
with full force into the 1960's. The scope of the 
changes are revealed in a comparison of the 1960 and 
1970 censuses. 

Between 1960 and 1970 the total number of housing 
units fell from 19,621 to 15,683, a drop of 21 percent. 
For rental housing, the drop was even sharper; from 
15,889 to 12,075 a 24 percent decrease. The propor- 
tion of all housing units which were rental fell from 80 
percent to 76 percent. These numbers give only a 
minimal estimate of housing units destroyed, since 
housing constructed after I960 is included in the 1970 
figures. 

While the total Hyde Park population dropped 
12,019, there was only an 18 percent decrease in the 
white population, while the black population de- 
creased by 39 percent. With respect to socio-economic 
status, there was a 39 percent decrease in wage 
earners, while the number of salaried or self-employed 
workers rose by 15 percent. 

Since 1970 other phenomena have been responsible 
for the continuing regentrification of Hyde Park; the 
conversion of thousands of rental units to condomini- 
ums, high-cost co-op conversions, high-rent rehabilita- 
tion (often with the aid of government subsidies), and 
the continuing acquisition of residential buildings by 
local institutions (especially the University of Chica- 
go) for their own use. 

The Hyde Park Coalition on Housing and Tenant 
Rights 

In 1978, growing out of fights by Hyde Park tenants 
against the conversion of their apartments to condomi- 
niums, co-ops, and luxury rentals, a community-wide 
tenants group was formed to help tenants organize 
themselves to deal with their problems, and especially 



to stop the displacement of low and moderate income 
residents. In the spring of 1980, this group, called the 
Hyde Park Tenants' Union, joined forces with the 
housing committee of the relatively new West Hyde 
Park Community Organization, which organized in 
the predominantly Black half of Hyde Park, to form 
the Hyde Park Coalition on Housing and Tenant 
Rights. The primary goal of this group was to preserve 
the economic and racial diversity of the neighborhood 
in order to achieve true stability, helping the targets of 
gentrification to organize and struggle to remain in 
their homes. 

The Blackwood Apartments 

The Blackwood Apartments, a 144 unit hotel-style 
building located at 5200 South Blackstone Avenue, 
was built in the 1920's and was considered to be an 
elegant building until it began to decline in physical 
condition about fifteen years ago. 

Anticipating the eventual sale of his building, the 
then owner of the Blackwood began cutting services 
and allowing the building to deteriorate several years 
prior to its sale. 

In the 1960's and early 1970's the Blackwood was a 
stable, racially integrated building. In 1980, one tenant 
recalled that even three or four years earlier the racial 
mix had been about 60 percent Black, and about 40 
percent white and other. By the spring of 1980, 
however, the Blackwood was 90 percent to 95 percent 
Black. Many of the residents were low to moderate 
income families, and some had lived there for many 
decades. The population was a mixture of young, 
single people, young couples with small children, and 
senior citizens who lived alone. 

By spring, 1980, there had been serious physical 
problems in the building for quite some time but the 
tenants had not been organized to deal with these 
problems. In the previous years, the residents had paid 
increasingly higher rents for increasingly fewer ser- 
vices. Complaints went unheeded, and repairs were 
neglected. 

In May of 1980, the Blackwood was sold to 
developers who planned to do extensive renovation. 
About two months before the building sale was closed, 
the tenants began receiving letters from the manage- 
ment company. Although the letters varied, the early 
ones usually offered benefits to tenants who would 
move before the expiration of their leases (most of the 
leases ran until September, 1980). 

The tenants who failed to take advantage of these 
offers (a majority) then began to receive more intimi- 



17 



dating letters. Tenants were told that major construc- 
tion work would begin in their building during April, 
and that those who remained would do so at their risk. 
Some residents were intimidated into leaving at this 
stage, but most were not. 

Finally, in June, the new management company 
decided to get tough with the 90 or so families still 
hving in the building. On June 2, representatives of 
Sabina Realty entered the building without warning 
and took the lock off the outer door, fired the 
switchboard operators, and destroyed the switchboard 
by severing the wires. Within the next two weeks, 
major demolition began in the vacant apartments, 
hallways, and lobby. At this point the tenants, who 
had depended upon the switchboard and its operators 
to provide security, fire and elevator alarms, and mail 
distribution, became understandably upset and began 
to organize. 

Although the tenants organized under pressure and 
in the midst of a crisis, they were, nevertheless, able to 
accomplish a great deal. Within ten days of the 
switchboard incident they had organized a functioning 
tenants union, elected officers, replaced the buzzer 
lock on the front door, made arrangements for tenants 
to sit at the front desk on a volunteer basis, contacted 
the newspapers, and secured the services of two 
attorneys from the Legal Assistance Foundation and 
one private attorney who offered her services free. 

The Tenants' Fight 

The Hyde Park Coalition on Housing and Tenant 
Rights (HPC) began to assist the Blackwood tenants 
during the first week in June, just two or three days 
after the switchboard had been disconnected. 

By the time that the major remodeling and demoli- 
tion had begun, most of the tenants were already 
discouraged and had already lost hope that it would be 
possible for them to remain in the building through 
the remodeling, they would still not be able to afford 
the post-redevelopment rents which would be more 
than double the rents they were currently paying. 

A substantial minority of tenants, however, still 
wanted to fight to remain, even though they recog- 
nized that their chances for this were not good. At an 
early tenants meeting a strategy was adopted to stop 
the demolition and harassment and to get the building 
restored to a safe, decent condition for the duration of 
the tenants' lease periods. This, the tenants reasoned, 
would be an essential step whether or not they were 
going to fight to remain over the long run. If this first 
goal could be realized, the tenants agreed that their 



second step would be to try to negotiate with the new 
owners about how those who wanted to remain at the 
Blackwood could do so. 

After the tenants decided what their goals would be, 
the HPC helped them develop a strategy for their 
fight. Although the HPC members involved tried not 
to influence the tenants' decisions about whether or 
not to try to prevent their displacement, the Black- 
wood tenants have since said that simply having the 
support of the HPC at that time gave them more 
confidence about what might be possible if they put up 
a fight. 

One major part of the tenants' strategy involved 
trying to keep the attention of the news media focused 
on the situation in order to pressure the owners to deal 
with them. They were very aggressive in soliciting 
news coverage, and this approach was highly success- 
ful. Three local papers, the Chicago Defender and 
Channel 7 covered the Blackwood story on a continu- 
ing basis. 

Because the redevelopment was being carried out 
under a HUD mortgage insurance program, it was 
thought that HUD might be willing to intervene on 
behalf of the tenants. The PHC organizer and a few 
HPC members accompained the Blackwood tenants to 
their first meeting with HUD officials. HUD, how- 
ever, simply refused to acknowledge that they had any 
responsibility to take action to get the new owners to 
halt or moderate their work and restore what they had 
already destroyed. HUD also refused to intervene with 
the owners to push them to give the tenants consider- 
ation for rent subsidies (for which the use of the HUD 
mortgage insurance made the building eligible) and 
the option to remain. 

The tenants then made attempts to negotiate direct- 
ly with the new owners, but the owners wanted only to 
talk to individual tenants while refusing to deal with 
the tenants collectively. 

By this point the HPC was assisting the Blackwood 
Tenants' Union (BTU) leaders in conducting door-to- 
door visits to all the apartments. These visits served 
several purposes: 

1) To recruit tenants to become more actively 
involved in BTU. 

2) To get information about the efforts the man- 
agement was making to divide or weaken the BTU, 
intimidate individuals or trick individuals into 
giving up their legal rights. 

3) To disseminate information to all tenants about 
recent developments. 

4) To assess the mood or spirits of the tenants. 



18 



5) To find out what special problems individuals 
might be having with apartment conditions, rent 
payment, etc. 

6) To find out what issues each tenant felt should 
be of highest priority for the BTU to address. 
These door-to-door visits continued on a frequent 

basis throughout the remaining four months that the 
tenants occupied the building. Full building meetings 
occurred about once every two weeks in August and 
September. Meetings or phone discussions took place 
almost daily between the BTU leaders and a few HPC 
people who were assisting the tenants. 

On June 13, with the HPC's assistance, the BTU 
put out its first building newsletter. Four more 
newsletters were put out over the next month, 
supplementing the door-to-door communication. 

In Mid-June the tenants also distributed several 
hundred copies of a "fact sheet" throughout the 
neighborhood, explaining what was happening at the 
Blackwood and inviting interested community resi- 
dents to a meeting with the tenants. This resulted in a 
few neighbors attending and giving financial as well as 
moral support to the Blackwood tenants, giving the 
tenants a great psychological boost. 

Other efforts to reach out for more community 
support included two speeches given by the BTU 
president at Operation PUSH and meetings with the 
local alderman. Later, representatives from PUSH and 
the alderman appeared at the tenants' court hearings 
to lend their support. 

On June 20 the tenants went to court and they were 
able to win an emergency injunction which halted 
demolition and directed the owners to restore the 
building to a safe and habitable condition. Although 
the owners did everything in their power to delay 
complying with the court order, they did eventually 
restore the switchboard, replace the operators and 
secure the open, partially demolished apartments. 

The tenants went to court several times between 
June and September, and they were able to keep the 
injunction in force with only minor modifications until 
mid-September. That they were able to do this despite 
the owner's almost weekly attempts to weaken the 
court order and almost daily attempts to divide and 
trick the tenants is a testimony to the good communi- 
cation and trust that the BTU developed. The Black- 
wood certainly would have become unlivable if the 
tenants had failed to create a solid tenants union. 

While the injunction remained in effect, the owners 
were losing several hundred dollars a day on interest 
they were paying on a construction loan of about $2 



million. With this leverage, the BTU and the HPC 
believed that the owners would be forced to negotiate 
with and give concessions to the tenants. It was felt 
that it would be possible not only to get monetary 
settlements but also to get arrangements for the 
tenants allowing some of the rehab work to proceed. 
In retrospect, however, it is clear that this strategy was 
based on a miscalculation; the owners used the 
negotiations for their own purpose of keeping tabs on 
the tenants' relative strength. Several times when a 
settlement seemed near, the owners would back out of 
it at the last minute. The owners picked such moments 
during which the tenants were "off guard" to try some 
new gambit in court or a new ploy to trick a few more 
tenants into moving. 

As the owners delayed, tenants gradually began 
moving out, shifting the balance of power. 

During July the HPC discovered that the Lake 
View Citizens Council Tenants Rights Committee was 
involved with tenants in two other hotel-apartment 
buildings in their neighborhood which were also 
owned by American Development and managed by 
Sabina, and in which similar problems were occurring. 
A Blackwood tenant and two HPC members attended 
a meeting of these Lake View tenants. The informa- 
tion which was shared at this meeting helped each 
group better understand their enemy. This knowledge 
also hardened the resolve of the Blackwood tenants 
against their landlord who they now knew to be 
treating other tenants unconscionably as well. 

Soon the Lake View and Hyde Park groups began 
to do more research on American Development and 
Sabina, using the Freedom of Information Act to 
obtain from HUD these companies' unfavorable "Pre- 
vious Participation Reports" and "Management Re- 
views" concerning their developments in other cities. 
Information was exchanged with tenant and commu- 
nity groups in Denver and Kansas City that had had 
similar experiences with these companies. It was found 
that these companies had been involved in more than 
75 similar projects throughout the country, often 
involving major disputes with tenants and violations of 
HUD rules as well as tenants' rights. 

The BTU and the HPC attempted to use this 
information to pressure HUD into taking some action 
against the developers. However HUD continued to 
say that they had no responsibility for the way that the 
developers dealt with the tenants. 

By mid-September all but about 15 to 20 families 
had moved out, some because of the slowly worsening 
building conditions, others because their leases either 



19 



had already expired or would soon expire. By this time 
the remaining tenants knew their displacement was 
inevitable, and that no negotiated settlement for 
money or relocation assistance would be possible 
outside of their lawsuit. 

On September 24, just three days before the last of 
the leases were to expire, the BTU and the HPC held a 
"funeral" for the Blackwood Apartments, mourning 
its "death" as an affordable rental building. In 
response to pressure from the BTU, the HPC and 
some local elected officials, two HUD officials — in- 
cluding the Chicago Area Director, Elmer Binford — 
attended this gathering. Although Binford publicly 
promised to assist the remaining tenants in finding 
new housing, HUD actually did very little. 

Although the BTU was very successful with regard 
to its high level of participation, the orientation of its 
members toward direct action, the high quality of its 
internal communication and the sense of trust that 
existed among its members, the Blackwood tenants 
still were not able to prevent their own displacement. 
In hindsight, the objective conditions under which the 
Blackwood tenants struggled were perhaps too diffi- 
cult for the outcome to have been much better even if 
the tenants had used a different strategy. The only 
other strategy that seems obvious for the Blackwood 
tenants to have tried would have been to focus on 
HUD as their main target, demanding that they take 
responsibility for preventing the demolition, harass- 
ment and even displacement. But based upon the 
limited experience the tenants had with HUD, it seems 
doubtful if much could have been accomplished with 
this strategy, while the more direct efforts to stop the 
demolition and make the building safe might not have 
been given enough emphasis to have been successful. 

But even though the Blackwood tenants eventually 
had to move, they were able to do two very important 
things: protect their own safety and well being and call 
community attention to the problems tenants face 
with landlord harassment and displacement from 
neighborhood gentrification. 

The importance of the HPC's role in advising, 
supporting and providing the assistance of an organiz- 
er to the BTU lies in the time and frustration saved 
bcause the Blackwood tenants did not need to "re- 
invent the wheel" to organize a strong tenants union 
and to plan a realistic strategy. The HPC has played a 
similar role in about five other buildings where tenants 
were fighting to avoid being displaced by some form of 
redevelopment (condo or high-cost coop conversion or 
high-rent rehab). The Blackwood is a typical case in 



that usually the tenants are eventually forced to move. 
(In fact, only in one building were the tenants 
successful in stopping their displacement). But the 
HPC has learned a great deal about which strategies 
work and which do not under a variety of circum- 
stances. Without assistance from an experienced group 
which can see the issue from a long view, it would be 
less likely that the Blackwood tenants would even 
have been able to protect themselves as effectively as 
they did, much less have been able to raise the 
gentrification and displacement issues in the commu- 
nity as sharply as they did. 

The existence of a community-wide tenants' groups 
like the HPC also gives continuity to separate strug- 
gles over the same issue which take place at different 
times and in different buildings. For example, tenant 
leaders from one building often become volunteer 
organizers, helping tenants in other buildings who are 
facing problems with which the former leader is very 
familiar. The community-wide tenants group is also in 
a unique position of being more familiar with a 
housing problem that manifests itself in a slightly 
different fashion over and over again in different 
buildings. This experience gives the community-wide 
tenants group the perspective from which to propose 
possible comprehensive solutions to such housing 
problems. 

With regard to developers doing major demolition 
and construction in buildings occupied by residents 
whose legal tenancy has not expired, the HPC has 
worked on two approaches for alleviating this prob- 
lem. The first is a legislative approach to require 
developers doing major rehab to give tenants a notice 
ahead of time, in a manner comparable to the way 
tenants are given notice prior to condominium conver- 
sion' The HPC was asked by State Rep. Barbara 
Currie to help draft a proposed state statute to require 
this "rehab notice." HPC's second solution to this 
problem is a document called the "Hyde Park Rehab 
Covenant" in which are contained standards of 
fairness, decency and safety to be followed by anyone 
doing rehab in Hyde Park. The HPC's campaign to 
get all area developers to sign this Covenant has gotten 
off to a good start, with it being signed by a very 
prominent developer. It is thought that if developers 
follow non-disruptive procedures doing rehab in the 
neighborhood, the irresponsible developers (who rely 
on ignoring the rights of tenants legally occupying 
their apartments in order to expedite their redevelop- 
ment and profit making) will no longer find it 
profitable to do their kind of redevelopment, thereby 



20 



reducing the total amount of gentrification and 
displacement. 

Conclusions 

The need to stabilize, control, and provide safe and 
affordable housing in low income. Black, and Hispanic 
communities is growing as the dual housing market 
tightens. The upper income, predominantly white 
housing market is shrinking because of high interest 
rates and prohibitive new residential construction 
costs. The low income housing market is shrinking 
because tax incentives to real estate speculators and 
government housing programs encourage upper in- 
come housing market participants to move into 
neighborhoods where the low income housing market 
functions. While people with greater incomes move 
into neighborhoods once limited to the low income 
housing market participants, traditional institutional 
barriers such as racism and housing discrimination 
restrict low income. Black, and Hispanic residents 
from having safe housing options. 

The most important activity that tenants can 
involve themselves in is organizing. Organizing is the 
first step in the process of influencing, stabilizing, and 
controlling their communities. The problems that exist 
in the dual housing market must be confronted in the 
neighborhoods by organized tenants, particularly or- 
ganized low income housing market residents. Blacks, 
Hispanics, and low income residents. 

Organization should take place on several levels in 
order to be successful; the building, the neighborhood, 
and the metropolitan area. Building organization is 
important because tenants are in the same circum- 
stances with others in their building; they all pay rent 
and they all sufl'er from the same poor conditions or 
the treat of displacement. Organizing promotes a clear 
line of communication to the building management 
that, if strong enough, cannot be ignored by them. It 
also promotes as well as to solicit assistance from 
neighborhood and technical assistance organizations. 

Block and neighborhood tenant organizations are 
important because they support building tenant orga- 
nizations and individual tenants. They serve to link 
tenants in one building with tenants in other buildings 
on the block, or in other neighborhoods that may have 
similar problems. Links with technical assistants and 
other resources people are enhanced. Perhaps the most 
important service that block and neighborhood tenant 
organizations do is to encourage and sustain their 
efforts when they meet with strong resistance. 



The Blackwood building case study demonstrates 
the need for tenants in a building under the threat of 
significant residential turnover from lower income 
residents to organize themselves. The development of 
the Blackwood tenants, as well as the impetus to 
continue with the struggle for their rights to remain in 
their neighborhood was actively supported by the 
neighborhood tenant organization. The neighborhood 
organization researched the developers history with 
the Department of Housing and Urban Development, 
and asked HUD to intervene for the tenants. Al- 
though HUD refused, this was an important option 
which the building organization might not have been 
aware of without the presence of the neighborhood 
tenant group. 

Metropolitan-wide tenant organizations are best 
used to consolidate the political power of tenants. In 
addition to promoting the enforcement of building 
safety and code violations, monitoring displacement, 
and supporting building and neighborhood tenant 
organizations, the collective interest of tenant organi- 
zations must be to protect tenants through legislation 
and the accountability of public officials. 

Today there are many obstacles to effective tenant 
organizing. Some of these obstacles are rooted in law 
or government policy, and until the government 
removes these obstacles, it is contributing to the 
housing crisis faced by low and moderate income 
families. Blacks, and Hispanics. 

One of the primary obstacles to tenant organizing is 
tenants' fear of landlord retaliation. Many states and 
cities do not have laws to protect tenants such as "just 
cause" eviction laws or laws to prevent retaliatory 
evictions. Such laws are needed at the federal level. 

Tenants must have basic recognition of their right 
to bargain collectively with landlords concerning 
rents, leases, and building conditions. For this reason, 
tenants' counterpart to the Wagner Act should be 
adopted. 

Most government housing programs do not have 
provisions to protect tenants from displacement. As 
the Blackwood Apartments case illustrates, when 
tenants have no legal recourse to prevent their 
displacement they are less enthusiastic about orga- 
nizing to resist any of the other problems that they 
face. Strong anti-displacement regulations for housing 
programs assisted by any level of government are 
badly needed. 

There have been recent cutbacks in federal pro- 
grams which have provided staff for tenant organiza- 
tions. Several Chicago organizations who work with 



21 



tenants have lost staff as a result of cuts in VISTA 
alone. The true economic and social costs of these 
cuts, given the housing crisis developing today, will be 
much higher than the small savings they will produce. 

Recent restrictions in the application of the Free- 
dom of Information Act have made it difficult for 
tenants to get information from government agencies 
concerning plans for their buildings or communities. 
With less information, the availability of which is 
subject to arbitrary delays, tenant organizing is frus- 
trated. In the area of housing, there can be no excuse 
for government secrecy concerning plans for develop- 
ments in which the government is involved. 

There are other areas, outside of those that bear 
directly on tenant organizing, where law or govern- 
ment policy changes could help alleviate our present 
housing crisis. In general, most federal housing 
programs are designed for the benefit of developers, 
with the housing needs of low and moderate income 
people given only secondary consideration. But even 
these problematic programs, including the Section 8 
program, are now being threatened with destruction. 
The number one housing priority of the federal 
government should be to continue to build and 
maintain affordable housing for low and moderate 
income people, including both public and private, 
subsidized housing. 

As the Blackwood case illustrates, the federal 
government does not take adequate measures to 
prevent the use of their housing programs by devel- 
opers who have poor records in the areas of building 
management or landlord-tenant relations. Poor perfor- 
mance should disqualify developers from participating 
in federal and state housing programs. 

Federal tax laws which allow landlords to deduct 
building depreciation from their tax bills encourages 
the frequent resale of rental property, resulting in 
higher building costs (hence higher property taxes), 
additional costs associated with the real estate transac- 
tion, and, usually, higher financing costs for the new 
owner. All of these increases are passed along to the 



tenants in the form of higher rents. Frequent resale of 
rental buildings discourages owners from making 
long-term investments in cost saving measures such as 
weatherization which could hold down housing costs 
over time. 

Federal tax laws also encourage condominium 
conversion, taxing the profits on the sale of buildings 
to developers at the capital gains rate which is lower 
than the rate at which ordinary income is taxed in the 
higher income brackets. 

Federal tax law should be written to help those who 
need tax breaks the most; the renters. It also should 
reward owners of rental property who maintain and 
keep their buildings over the long run, and not 
speculators and slumlords. Profits gained through real 
estate speculation should be taxed at a much higher 
rate. 

Rent control can be a tool for preserving neighbor- 
hoods by preventing displacement which results from 
rapid rent increases. Although rent control may only 
be a short term measure to get through a period of 
severe shortage of rental housing, the stability that it 
could help produce might reduce the need for expen- 
sive public or private measures to deal with the 
socially detrimental effects of neighborhood instabili- 
ty. The federal government, if it will not support 
national rent control measures, should at least refrain 
from weakening or eliminating local rent control laws, 
as a Presidential Task Force has recommended. 

These proposals will not solve all the problems of 
low and moderate income. Black, and Hispanic 
tenants in the dual housing market, but it will make it 
possible for tenants to organize to solve these prob- 
lems themselves. The dual housing market has shown 
no signs of relaxing, and is indeed growing worse as 
the economy tightens. In this new era of free enter- 
prise, it is time that low and moderate income. Black, 
and Hispanic tenants be allowed the opportunity to 
freely and effectively organize to assert their own 
interests in order to break through the hardships of a 
housing crisis that threatens to leave them homeless. 



22 



Mortgage Lending, Blacks and Hispanics: 
From the Dual Housing Finance Market 
to Reinvestment to a Unitary 
Unsatisfactory Market for All 

by Dennis R. Marino, Woodstock Institute 

This paper has been prepared for the Illinois 
Advisory Committee of the U.S. Commission on Civil 
Rights for use during its conference "Chicago's House 
Divided — Public Housing and the Dual Housing 
Market." 

The focus of the paper is the access of minority 
families to affordable conventional credit to finance 
housing purchases in inner-city neighborhoods. 

The objectives of the paper are: 

1) To define the dual housing market and trace its 
evolution; 

2) To assess the impact of the reinvestment 
movement on the access of minority families to 
affordable conventional mortgage credit; 

3) To analyze the impact of high interest rates and 
adjustable rate mortgages (ARM's) on inner-city 
consumers, especially minority families; 

4) To evaluate the recommendations of President 
Reagan's Commission on Housing, especially those 
recommendations which address the availability of 
credit in inner-city neighborhoods and; 

5) To suggest recommendations for improving the 
access of minorities to affordable conventional 
credit, and for making adjustable rate mortgages 
less onerous for consumers. 

Dual Housing Finance Market — Introduction 

The historic definition of the dual housing market 
for single-family housing is the existence of two 
separate supply-demand relationships. It is a segment- 
ed market in which both buyers and housing to-be- 
bought are divided along racial lines. 

The dual housing finance market has been defined 
also as two separate supply-demand relationships, 
often divided along racial lines. The analysts who have 
developed the dual finance market theory have con- 
tended that conventional financing has been restricted 
to whites, while blacks and hispanics have been 
restricted to contract, cash or government guaranteed 
financing. 

It is clear that the traditional theory of the dual 
housing finance market does not totally describe the 
housing finance markets in many cities today as 
accurately as it has in the past. Increasingly, black and 
Hispanic neighborhoods have been able to secure 



access to conventional credit, although admittedly 
there are still many lenders who continue to fail to 
make conventional financing available in minority 
neighborhoods. 

Through a combination of lender initiative, commu- 
nity pressure, the Community Reinvestment Act and 
shifts in institutional perceptions, some financial 
institutions, such as Talman-Home and First Federal 
Savings and Loan Associations, have increased their 
lending in minority neighborhoods dramatically. Since 
mid- 1979, however, housing finance markets have 
been in turmoil due to high interest rates, and more 
recently, the ehmination of the fixed rate mortgage. 

The Evolution of the Dual Housing Finance 
Market 

The following traces the development of the dual 
market through two significant financing mechanisms 
on which minority families in Chicago have been 
dependent: contract sales and mortgages insured by 
the Federal Housing Administration. Contract sales 
were the primary means of financing in minority and 
racially transitional neighborhoods in the 1950's and 
1960's. FHA-insured mortgages became a major 
source of financing for minority families in the late 
1960's. 
Con trad Sales 

Prior to the late 1960's, the Federal Housing 
Administration and most conventional lenders were 
not financing homes in areas of minority concentra- 
tion. Lack of conventional and FHA mortgage money 
forced blacks and other minorities to buy homes on a 
land installment contract. Frequently, speculators 
would purchase homes from white residents in areas 
by using the fear of racial change to force residents to 
sell their homes in a hurry for much less than the true 
value. These speculators would make a few minor 
alterations or repairs to the homes and then sell them 
on contract to black buyers at highly inflated prices. 

In order to carry out this process of profiteering on 
racial fear, these speculators, most frequently realtors, 
depended on a line of credit to finance their own 
mortgages on the homes they bought from fleeing 
whites. Typically, the speculators developed lines of 
credit with smaller savings and loans. When the house 
was sold on contract, the buyer did not have a 
mortgage but made installment payments. Under this 
arrangement, the buyer built up no equity and did not 
gain title until the last payment was made. If a single 
payment was missed, the sjjeculator, who was the legal 



23 



owner and mortgagor, could repossess the home and 
sell it to someone else. 

In the long run, so many buyers defaulted on their 
inflated payments that the speculators, in turn, de- 
faulted on their own mortgage payments. This created 
huge losses for the institutions which had provided the 
mortgages for the speculators. 

These practices abused and alienated many minority 
homebuyers. They also resegregated and contributed 
to the destruction of the viability of many neighbor- 
hoods. 

Many of the homes were sold in defective condition. 
The inflated contract payments stretched the re- 
sources of the contract buyers beyond the point where 
they could afford to maintain the homes. Many homes 
eventually became abandoned. One blessing was that 
the speculators depended on a very small source of 
capital, which restricted the scope of their operations. 
In addition, in the late 1960's two major class action 
suits were filed against contract sellers, participating 
lenders, realtors and HUD-FHA for allegedly partici- 
pating in a discriminatory housing market (Wells v. F. 
and F. Investments and Clark v. Universal Builders). 
The Emergence of FHA in the Inner-City 

Pressure from civil rights groups, lessons from the 
urban riots, and the mandate of the 1968 Civil Rights 
Act were producing changes in FHA policies toward 
older, racially changing and minority neighborhoods. 

Beginning in the mid-1960's, a change in FHA 
appraisal and underwriting standards provided buyers 
of inner-city housing with substantial opportunities for 
obtaining government-insured mortgages. Previously 
FHA-insured mortgages were usually made available 
in newer areas only. In November of 1965, the FHA 
Commissioner issued a statement of general policy 
which mandated the following: 

FHA must stimulate and assist residential rehabilitation and 
financing of property transfers in ail neighborhoods where 
values are sufficiently stable and long range prospects 
sufficiently promising to make insurance of long term loans 
a reasonable risk. Areas should not be excluded from FHA- 
insured loans because they are old and located in the central 
part of the city. 

Unlike the FHA, most conventional lenders at this 
time failed to change their practices of not making 
loans available in racially changing and minority 
neighborhoods. In fact, with the expansion of FHA 
insurance in the inner-city, conventional financing was 
withdrawn more rapidly from transitional areas. This 
resulted in the reinforcement of the dual housing 



market by making separate types of home financing 
available to different neighborhoods: conventional 
financing for white neighborhoods; and FHA-insured 
financing for minority neighborhoods and neighbor- 
hoods in racial transition. 

The rapid, and relatively unregulated, infusion of 
FHA insurance into city neighborhoods transformed 
the scale of exploitation by contract sellers from an 
operation dependent upon the limited capital of a few 
local lenders to a massive process fed by the large 
capital flows of the mortgage originators who could 
avail themselves of FHA-insured programs. Some 
contract sellers simply attempted to modify the old 
system by selling the properties they bought to 
minority buyers via the use of FHA-insured mort- 
gages. 

FHA-insured lending continued to be the primary 
means of financing home purchases by minorities 
throughout most of the 1970's. Beginning in 1975, 
however, the reinvestment movement began to have 
an impact on the traditional dual housing finance 
market. 

The Reinvestment Movement: Its Impact on the 
Dual Housing Finance Market 

Since 1975, there has been a significant increase in 
the volume of conventional lending in minority 
neighborhoods in the city of Chicago. This has been 
especially true of Talman-Home and First Federal 
Savings and Loan Associations. These two institutions 
substantially increased their lending in the black 
neighborhoods of South Shore, Roseland, Englewood 
and South Austin. 

Prior to 1975, each of these neighborhoods had 
difficulty attracting conventional financing. Conse- 
quently, they were heavily dependent on FHA and 
VA-insured mortgage lending by mortgage banking 
firms. Talman and First Federal, however, contend 
that they made some loans in these neighborhoods 
prior to 1975. 

From 1975-79, Talman-Home and First Federal 
increased their loan volume by three times and their 
dollar volume by almost nine times. Talman-Home's 
lending volume increased 1.5 times. Talman's dollar 
volume increased by 27 times, while First Federal's 
dollar volume increased by three times. 

As a result of the activity of Talman and First 
Federal, and several other lenders, the dual housing 
finance market is less rigid than it was prior to 1975. 
However, there remain a number of lending institu- 
tions, such as Bell Federal Savings and Loan, Central 



24 



National Bank, Harris Bank and LaSalle National 
Bank, which failed to make more than a pittance of 
mortgage loans in minority communities from 1975- 
79. They appear to not have been affected by pressure 
from consumers and regulators, or the realization by 
most of the lending industry that single-family lending 
in minority neighborhoods is safe and sound. 

1979-81: High Interest Rates and Adjustable Rate 
Mortgages: A Unitary Unsatisfactory Market for 
All 

Since 1979, the existence of high interest rates and 
the emergence of adjustable mortgage instruments 
have placed most neighborhoods, minority and white, 
in a unitary system of credit malnutrition, if not 
starvation in some cases, especially during the last 
year. Consequently, the traditional concept of the dual 
housing finance market has not been as relevant in 
explaining market conditions. 

During the last two years, interest rates have ranged 
between 10 percent and 19 percent. Although this 
affects all neighborhoods, it most harshly limits credit 
availability in moderate income communities where 
residents may qualify for financing at 9 percent, but 
not at 15 percent. Consequently, these neighborhoods, 
as well as many middle income neighborhoods, have 
been forced to resort primarily to cash transactions, 
contract sales and other "creative financing mecha- 
nisms" which were once restricted to minority neigh- 
borhoods unable to secure conventional credit regard- 
less of market conditions. 

The effect of this credit crunch is the flattening of 
housing value appreciation and the imposition of 
limitations on the mobility of neighborhood residents 
who are unable to sell or purchase new homes. 

A second factor greatly affecting inner-city housing 
markets — and the potentional effect is greater than the 
present — is the virtual elimination of the fixed-rate, 
long-term mortgage which has been characteristic of 
the American housing market since the 1930's. 

Since 1978, many savings and loan associations, 
which have done the bulk of mortgage lending 
historically, have been trapped in a major asset-liabili- 
ty mismatch. This involves a mismatch between a 
portfolio of aged loans with an average yield of 6-7 
percent, and increasing costs of deposits ranging from 
9-16 percent on 6 month and 2'/, year certificates. 
With this negative spread, many savings and loan 
associations have been pushed to the brink of collapse 
by incurring record quarterly losses for the past five 
quarters. 



In order to cope with this mismatch, the savings 
and loan associations launched a major lobbying 
campaign to gain permission to offer adjustable rate 
mortgage loans. These loans are characterized by 
interest rates which can be adjusted to reflect the 
increased cost of money to savings and loan associa- 
tions. Consequently, the savings and loan will not 
incur a negative interest spread. Increased costs will be 
passed onto the borrower on a monthly, quarterly, or 
every six-month basis, depending on the terms of the 
loan. 

For many moderate income families, this develop- 
ment will limit their access to home ownership 
through conventional financing. A family which has 
stable income to afford a fixed rate 29-year mortgage, 
may not be able to afford the potential level of increase 
in interest payments which could occur with an 
adjustable mortgage instrument. 

Frank Coleman, Jr., the mortgage loan manager of 
Illinois Sevice Federal Savings and Loan Association, 
recently stated that adjustable mortgage loans would 
"literally wipe out most blacks. They do not offer 
blacks the stability we are accustomed to when we buy 
a home. That is, after all, the largest and most 
important acquisition in our lives." 

Mr. Coleman's concern is underscored by the 
following example. An adjustable rate mortgage loan 
made in January, 1978, with an initial interest rate of 
9.15 percent and subsequent rate adjustments tied to 
the 6 month Treasury bi!' rate would have risen to 
17.39 percent by January, 1981. The monthly payment 
on a $50,000 mortgage would have increased from 
$408 to $722. This represents a 77 percent payment 
increase over a three year period in which the average 
wage for U.S. workers rose only 27 percent. 

The Center for Community Change, in a recent 
assessment of adjustable mortgage instruments, cited 
the following concerns which could seriously affect 
many households, especially moderate income minori- 
ty households: 

The prospect of monthly payments increasing at a rate many 
times faster than the rate of increase in the household's 



The prospect of the outstanding balance on a mortgage loan 
increasing faster than the value of the house, thereby eroding 
the homeowner's equity, and even causing the homeowner to 
owe more than the house is worth; 

The strong danger that the prospect of rapidly increasing 
monthly payments and/or rapid increases in the loan 
balance will cause lenders to become much more conserva- 



25 



live and restrictive in their lending criteria, discriminating 
against borrowers when they do not perceive to be upwardly 
mobile, and encouraging the resurgence of redlining of older 
urban neighborhoods which the lender may believe will 
appreciate less rapidly than average; 

The prospect that the use of more restrictive lending criteria 
will have a sharp discriminatory impact on minorities; 

For borrowers in older urban neighborhoods who do get 
loans, the danger of significantly increased default rates, 
thus inducing the spread of abandonment; 

The prospect of increased incentives to lenders to intensify 
their lending in gentrifying areas where property apprecia- 
tion may be rapid, thus fueling displacement of existing 
residents; 

The prospect that jjersons shopping for a mortgage will be 
presented with a multitude of complex indexes to determine 
interest rate adjustments, thereby making comparison shop- 
ping extremely difficult; 

The prospect of the lender deciding to adjust the interest rate 
only when the index has gone up, creating a situation where 
the interest rate on the mortgage can only move up, and 
never move down; 

The prospect of very frequent adjustments in the interest 
rate and the monthly payment, creating difficulties in family 
budget planning; 

The prospect of inadequate and misleading disclosure 
materials for adjustable rate mortgages, creating a situation 
where consumers are unable to make informed decisions; 

The threat of the disappearance, or at least the very sharp 
curtailment of, the availability of fixed rate mortgages for 
those who need such mortgages. 

Recommendations to Alleviate Problems with 
Access to Affordable Housing Credit 

This section begins by analyzing the response of 
President Reagan's Housing Commission to housing 
credit affordability and availability problems for mi- 
nority households. It concludes with a series of 
recommendations for addressing the dual housing 
finance market and the problems created by the 
increasingly exclusive use of adjustable rate mort- 
gages. 

The President's Commission on Housing 
This Commission was established by an Executive 
Order of President Reagan. The Commission's man- 
date is to advise the President and Secretary of HUD 
on options for the development of a national housing 
policy and the role and objectives of the federal 
government concerning the future of housing. The 
Executive Order directed the Commission to address 
five issues including "seeking to develop housing and 



mortgage finance options which strengthen the ability 
of the private sector to maximize opportunities for 
home ownership and provide adequate shelter for all 
Americans." One would assume that given such a 
mandate, the Commission would generate recom- 
mended strategies to ameliorate housing credit avail- 
ability and affordability problems experienced by 
minorities. 

The basic theme of the Commission's interim 
report, which was released October 30, 1981, is that 
housing problems are largely the result of problems in 
the overall economy. These are identified as unprece- 
dented inflation, extraordinarily high interest rates, a 
decline in the rate of economic growth and the low 
rate of increase in real income. These problems, of 
course, are allegedly caused by increasing federal 
deficits and the expansion of the supply of money at a 
greater rate than basic economic growth would justify. 
The report emphatically states that these problems 
will be resolved by President Reagan's economic 
recovery program of tax and expenditure reductions. 
The resolution of these problems will consequently 
improve the "housing situation." 

The Commission does acknowledge that there is a 
role for government in housing. The following seven 
items constitute the Commission's set of principles for 
guiding government action: 

1) Achieve fiscal responsibility and monetary sta- 
bility in the economy; 

2) Encourage free and deregulated markets; 

3) Rely on the private sector; 

4) Promote an enlightened federalism with mini- 
mal government intervention; 

5) Recognize the continuing role of government to 
address the housing needs of the poor; 

6) Direct programs towards people rather than 
structures; and 

7) Allow maximum freedom of choice. 

The report only lightly addresses the issue of 
housing market discrimination. The following state- 
ment is the major comment on the subject: 



Reliance on the private market as the fundamental mecha- 
nism for resolving housing problems can be fully effective 
only in the open, freely functioning market system. There- 
fore, the government should continue its efforts to eliminate 
discriminatory practices that create artifical barriers and 
inhibit freedom of choice in housing. 

Nowhere in the report, however, are there specific 
recommendations for addressing this problem, nor is 



26 



there any mention of housing credit discrimination or 
the dual housing finance market. 

After reading the report, one would assume that the 
only barrier to a free and open housing market is the 
discriminatory behavior of individual landlords, prop- 
erty owners or realtors. There is a complete failure to 
acknowledge considerable evidence of historic institu- 
tional discrimination which limits housing choices. 
Strategies designed to address institutional discrimina- 
tion such as the Community Reinvestment Act and 
the Federal Home Loan Bank Board's non-discrimina- 
tion regulations are completely ignored. It is assumed 
that all decisions made by capital and credit providers 
are solely based on irrefutable economic criteria 
gleaned from market data. 

The only anti-discrimination strategy alluded to is 
"a local support component" for open housing and the 
enforcement of anti-discrimination statutes, including 
current federal fair housing laws. There is no acknowl- 
edgment of the need for a federal role in fighting 
housing discrimination. 

The negative impact of high interest rates on the 
housing market during the last two years is acknowl- 
edged. According to the Commission, high interest 
rates are a necessary tool to reduce inflation which 
will in turn benefit the housing market. There is a 
failure to acknowledge how low and moderate income 
people, and especially minorities, are bearing a dispro- 
portionate share of the burden caused by this ap- 
proach. There is, however, an implicit assumption that 
minority families will share in the "filtering down" of 
benefits once the economy recovers. Many have 
recently read Mr. Stockman's sarcastic comments on 
this process in Atlantic Monthly. 

The adjustable rate mortgage is treated in one 
paragraph, despite the fact that its evolution is one of 
the major forces affecting future homeownership in 
America, especially for moderate and middle income 
families. 

After describing the rationale for adjustable rate 
mortgages from the perspective of financial institu- 
tions, the Commission concludes its treatment of this 
subject in a cavalier fashion with the following 
statement about the impact of ARM's on consumers. 



Adjustable rate mortgages do not directly help the house- 
hold's cash flow problem. However, there is no reason why 
the concept of adjustable rates and graduated payments 
cannot be combined with a single mortgage to meet — at least 
in part — the needs of both borrowers and lenders. 



Dual Housing Finance Market — Policy 
Recommendations 

The following three policy recommendations have 
been developed by Woodstock Institute to help main- 
tain — or perhaps recreate — a flow of affordable con- 
ventional credit for single-family housing in minority 
communities. In all cases, these recommendations can 
be implemented under existing regulatory agency 
authority without additional legislation or appropria- 
tion of public funds. The recommendations are sug- 
gested to the Illinois Advisory Committee to the U.S. 
Commission on Civil Rights in anticipation that it will 
in turn, advocate these policies with the Reagan 
Administration. 

I. Encourage the Reagan Administration to ac- 
knowledge that housing discrimination and equal 
access to affordable credit continue to be major 
problems in America due not only to isolated, individ- 
ual acts of discrimination, but more significantly due 
to institutional forces throughout the real estate 
industry which, in effect, limit the access for minority 
households to adequate housing and jobs. The litera- 
ture and reams of data confirming the existence of this 
major problem are very convincing. 

II. Advocate full enforcement of the Community 
Reinvestment Act of 1977 which requires federal 
financial institutions regulatory agencies to encourage 
their regulatees to attempt to meet community credit 
needs, especially the needs of low and moderate 
income families, within sound business practices. The 
regulatory agencies are required to assess the lending 
performance of banks and savings and loan associa- 
tions through regular examinations and whenever 
lenders submit an application for permission to 
establish a branch, form a holding company or engage 
in other structural changes. If an institution is failing 
to attempt to meet credit needs, then the regulatory 
agency may issue a cease and desist order and demand 
corrective action, or it can refuse to grant permission 
for the establishment of a new branch or other 
structural change desired by the offending financial 
institution. 

Since 1977, CRA has been a significant force which 
has encouraged or pressured some lenders to be more 
responsive to their communities, especially minority 
communities. Since 1980, however, many financial 
institutions have perceived that the Reagan Adminis- 
tration is not interested in enforcing CRA. Conse- 
quently, those lenders who require federal pressure 
and potential disincentives to stimulate them to meet 



27 



the requirements of their charters and CRA have not 
been taking initiatives in inner-city communities. 

III. Encourage the Federal Home Loan Bank Board 
(FHLBB) to enforce its non-discrimination regula- 
tions which are the most explicit and thorough anti- 
discrimination regulations at the Federal level. These 
regulations were promulgated by the FHLBB in 1978. 
They contain six major elements which: 

1) Prohibit member institutions from automatical- 
ly refusing to lend because of the age or location of 
the dwelling; 

2) Prohibit loan decisions based on discriminatory 
appraisals; 

3) Emphasize that there is a right to file a written 
loan application; 

4) Require member institutions to have written 
loan underwriting standards which are not discrimi- 
natory in effect and which are made available to the 
public upon request; 

5) Revise Equal Housing Lending Poster to in- 
clude prohibition against discouraging loan applica- 
tions; and 

6) Establish a new monitoring system for fair 
lending enforcement and analysis. 

In addition, the FHLBB regulations provide guide- 
lines in the following areas in order to eliminate 
practices which may discriminate, in effect, against 
minorities. 

1) Applicant's Prior Credit History Loan decisions should 
be based upon a realistic evaluation of all pertinent factors 
respecting an individual's creditworthiness, without giving 
undue weight to any one factor. The member institution 
should, among other things, take into consideration that: (a) 
in some instances, past credit difficulties may have resulted 
from discriminatory practices; (b) a policy favoring appli- 
cants who previously owned homes may perpetuate prior 
discrimination; (c) a current, stable earnings record may be 
the most reliable indicator of creditworthiness, and entitled 
to more weight than factors such as educational level 
attained; (d) job or residential changes may indicate upward 
mobility; and (e) preferring applicants who have done 
business with the lender can perpetuate previous discrimina- 
tory policies. 

2) Income Level or Racial Composition of Area Refusing to 
lend or lending on less favorable terms in patricular areas 
because of their racial composition is unlawful. Refusing to 
lend, or offering less favorable terms (such as interest rate, 
downpayment, or maturity) to applicants because of the 
income level in an area can discriminate against minority 
group persons. 

3) Marketing Practices Member institutions should review 
their advertising and marketing practices to ensure that their 
services are available without discrimination to the commu- 



nity they serve. Discrimination in lending is not limited to 
loan decisions and underwriting standards; an institution 
does not meet its obligations to the community or implement 
its equal lending responsibility if its marketing practices and 
business relationships with developers and real etate brokers 
improperly restrict its clientele to segments of the communi- 
ty- 

A review of marketing practices could begin with an 
examination of an institution's loan portfolio and applica- 
tions to ascertain whether, in view of demographic charac- 
teristics and credit demands of the community in which the 
institution is located, it is adequately serving the community 
on a non-discriminatory basis. The Board will systematically 
review marketing practices where evidence of discrimination 
in lending is discovered. 

Although these regulations were actively enforced 
by the Bank Board during the tenure of Chairman 
Robert McKinney and Chairman Jay Janus, there is 
no evidence to indicate that the current administra- 
tion, including Bank Board Chairman Richard Pratt, 
view the enforcement of these regulations as a serious 
priority. 

IV. Carefully assess the impact of monetary policy 
on inner-city housing credit markets and take steps to 
insure tha these critical markets, which are most 
immediately and drastically affected by high interest 
rates, are able to be sustained. One possible strategy 
would be the creation of a two-tiered rate for Federal 
Reserve's discount window. Banks which have been 
serving inner-city markets responsibly would be per- 
mitted to borrow funds at a lower rate. 

Adjustable Rate Mortgages — Policy 
Recommendations 

Adjustable rate mortgages appear to be an economic 
necessity for savings and loan associations due to de- 
regulation. Given the fact that de-regulation has 
increased the cost of deposits to financial instituions, 
they must be matched on the asset side of the balance 
sheet. Otherwise, financial decline and collapse are 
likely. 

An evaluation of the impact of de-regulation on the 
lending industry, housing industry and most impor- 
tantly, the American public, must be undertaken. 
Although the treatment of this subject is beyond the 
scope of this paper, it is apparent that major errors 
have been made in the timing and substance of 
numerous de-regulation measures. Serious consider- 
ation must be given to correcting these errors and not 
repeating them in the future. In many ways, the 
Banking and Monetary Control Act of 1980, which 
has been a primary vehicle for de-regulation, may be 



28 



one of the most important laws during the past decade 
affecting the abihty of moderate income famihes to 
secure home ownership through the conventional 
market. 

In 1981, the Center for Community Change recom- 
mended that the federal financial institutions regulato- 
ry agencies institute borrower protections for adjust- 
able rate mortgages and take steps to assure the 
continued availability of fixed rate mortgages. The 
Commission on Civil Rights should advocate the 
adoption of the Center's recommendations. 

These are as follows: 
Borrower Protections for Adjustable Rate Mortgages 

1) Monthly payments should not increase in any 
year at a rate greater than 2/3 of the rate of increase 
in the average U.S. workers' wage for the immedi- 
ately preceding 12 months. 

2) Negative amortization should be prohibited or 
strictly limited. 

3) All adjustable rate mortgages should use the 
same index for rate adjustments. 

4) Any rate adjustments shall only be made at 
regular intervals which shall be no more frequently 
than once a year. 

5) Disclosure statements should follow a stand- 
ardized format and provide (according to several 



economic scenarios prescribed by the regulators) 
several examples showing interest rate, monthly 
payment, and loan balance schedules for the full 
mortgage term. 
Assuring Continued Availability of Fixed Rate Mort- 
gages 

1) The basic FHA mortgage loan insurance and 
VA mortgage loan guarantee programs should 
remain on a fixed rate basis; they should be exempt 
from any Federal credit budget ceilings and thus be 
allowed to expand according to market demand. 

2) At least 50% of the conventional mortgages 
purchased by FNMA and the FHLMC should be 
fixed rate mortgages. 

3) Financial institutions should offer all qualified 
mortgage applicants of modest means and limited 
upward mobility the option of a fixed rate mort- 
gage. 

4) The federal regulatory agencies should monitor 
the availability of fixed rate mortgages to persons of 
modest means and limited upward mobility. If 
necessary to assure this availability, they should 
establish a requirement that a certain percentage of 
the mortgage loans made by each financial institu- 
tion in any year shall be fixed rate mortgages. 



29 



Federal Housing Programs and the 
Pursuit of Equal Opportunity: The Role 
of the Courts 

by Leonard S. Rubinowitz, Professor of Law and 
Urban Affairs, Northwestern University 

Introduction 

Low and moderate-income minority families face 
perhaps the most difficult problems of any group in 
our society in securing adequate and affordable 
housing in locations of their choosing. Federal subsidy 
programs are an important source of housing opportu- 
nities for this group of people; but these programs 
have often failed to contribute to achieving the 
objective of equal housing opportunity. Litigation 
represents one strategy for using these programs to 
advance the goal of equal opportunity in housing. This 
discussion examines the courts as a vehicle for 
achieving civil rights objectives through federal hous- 
ing programs. This paper does not assume that 
litigation is the only available strategy for facilitating 
housing choice through these programs. Nor does it 
suggest that resort to the courts is necessarily the most 
effective means to achieve these ends. The judicial 
forum has significant limitations. Lawsuits are lengthy 
and expensive and they may result in an adverse 
outcome. Even if they are successful in court, there 
may still be an extended and difficult challenge in 
implementing the decree and providing additional 
housing opportunities. 

Civil rights groups have emphasized two kinds of 
cases in this area, one challenging discriminatory 
administration of subsidized housing programs by 
public agencies and the other seeking to remove local 
zoning obstacles to the construction of low and 
moderate-income housing, the so-called exclusionary 
zoning lawsuits. Public housing desegregation cases 
may attempt to bring about construction of housing 
on an equal opportunity basis. They may also seek to 
secure broader access to the existing housing stock in 
the area. Exclusionary zoning litigation, on the other 
hand, has the sole purpose of facilitating construction 
of housing for people that could not otherwise afford 
to live in the jurisdiction involved. 

In the Chicago metropolitan area, the Gautreaux 
case is the major legal initiative designed to require 
public agencies to administer housing programs con- 
sistently with civil rights obligations. During the past 
decade, the courts have also decided two major 
Chicago-area exclusionary zoning cases, Metropolitan 
Housing Development Corporation v. Village of Arling- 



ton Heights and H.O.P.E., Inc. v. County of Du Page. 
This trio of lawsuits provides the focus of this 
discussion of the potential for litigation to expand 
housing choices for low and moderate-income minori- 
ty households. This paper also refers briefly to other 
court decisions that are relevant to an assessment of 
the effectiveness of the judicial strategy. 

The paper examines the purposes and history of 
these two kinds of litigation. It also discusses the 
current status of the Chicago-area cases and their 
prospects for the future. Finally, the paper makes 
recommendations for additional usage of the courts to 
expand housing opportunities for low and moderate- 
income minority households. 

Gautreaux: The CHA Case 

In 1966, a suit on behalf of the tenants of, and 
applicants for, public housing in Chicago alleged that 
the Chicago Housing Authority (CHA) had discrimi- 
nated in selecting sites for public housing and assign- 
ing tenants to these projects. The plaintiffs claimed 
that CHA had built almost all of the public housing 
for families in predominantly black neighborhoods of 
the city. Moreover, according to the plaintiffs, CHA 
had employed quotas to keep most blacks out of the 
few projects in predominantly white areas. In 1969, 
the Federal district court found that CHA had 
violated the constitutional rights of the plaintiffs — the 
equal protection clause of the fourteenth amend- 
ment — and the Federal civil rights act prohibiting 
racial discrimination in programs receiving Federal 
assistance. The court ordered CHA to build its next 
700 apartments in predominantly white areas and 
three-fourths of the dwelling units after that point in 
white areas to provide a remedy for the previous 
practices. Although the judge indicated that a portion 
of this remedial housing could be built in suburban 
Cook County, with the agreement of local officials, the 
thrust of the initial order was the construction of new 
public housing primarily in white neighborhoods of 
Chicago. The court also ordered CHA to adopt and 
implement a non-discriminatory tenant assignment 
plan. Finally, the Federal judge told the agency to 
increase the supply of public housing as rapidly as 
possible. 

Progress in implementing the 1969 order was 
painfully slow, however. A decade after the court 
ordered the CHA to expand the supply of public 
housing as rapidly as possible, there was little to show 
for these efforts. CHA built about 1 1 5 apartments for 
families during that period. The litany of causes for 



30 



the slow pace of public housing construction illus- 
trates the difficulty involved in converting the prom- 
ises of housing opportunity embodied in a court order 
into the reality of additional places for low-income 
minorities to live. Political, bureaucratic and fmancial 
obstacles abound. In this case, the delays began when 
CHA decided not to submit proposed public housing 
sites in white areas to the city council for its approval 
until after the mayoral election of 1971. CHA in- 
formed the judge that it would not risk the political 
reaction to such an announcement. The judge re- 
sponded that concerns about political reactions did 
not justify delays in providing a remedy for the 
constitutional violations in the case. He established a 
timetable for submission of the proposed sites for the 
city council review required by state law. Judicial 
appeals pushed back the timetable, resulting in the 
publication of the proposed sites shortly before the 
mayoral election. Mayor Daley expressed his opposi- 
tion to the courts telling local officials where to locate 
public housing, thus intensifying community antago- 
nism to the proposed housing. As a result, the city 
council acted on only a few proposed sites and the 
program was again stalmated. The district judge then 
set aside the operation of the state statute that gave the 
city council the power to review proposed sites and 
ordered CHA to develop the projects without city 
council approval. This was an unusual step for a 
district court to take — to set aside the operation of an 
otherwise valid state law because it impeded the 
efforts to provide relief for a constitutional violation. 
Indeed, under the current state of the law, a district 
court may not have the power to take such a step. 
Nevertheless, the order indicates the lengths to which 
it was necessary to go to expand housing opportunities 
throughout the city. 

With the lifting of the obligation to secure city 
council approval of proposed projects, CHA was 
theoretically able to construct the court ordered public 
housing. However, bureaucratic processes within 
CHA and the U.S. Department of Urban Develop- 
ment (HUD, the Federal agency that subsidizes the 
construction of public housing) produced additional 
delays. These delays led to the attrition of some sites — 
with alternative developments proceeding before CHA 
could acquire the land. 

Moreover, costs of public housing had climbed to 
the point that HUD disapproved some of CHA's 
proposals. The small scattered-site accommodations 
envisioned in the court order were more expensive on 
a per-unit basis than the traditional large-scale Robert 



Taylor Homes and Cabrini-Green style projects. As a 
result, HUD rejected some of the projects for financial 
reasons. 

Thus, construction of housing for the plaintiffs 
limped along for a decade, producing only a few 
scattered site developments, mostly on the city's north 
side. Then in 1979, there appeared to be something of 
a breakthrough in the form of a modification of the 
original order. CHA proposed a package of new 
construction and subsidization of existing housing in 
both black and white areas of the city. Mayor Byrne, 
CHA officials and lawyers for the plaintiffs endorsed 
this approach, which the court accepted. The plan 
recognized the need for additional public housing in 
black neighborhoods as well as the need to increase 
access to the existing housing stock in addition to the 
construction of public housing. CHA hired staff for 
these activities and the pace of progress began to pick 
up, although political, financial and bureaucratic 
problems continued to impede the implementation 
process. At last CHA seemed to be making efforts to 
comply with the spirit of the 1969 order. 

Some have suggested that the district court should 
have telescoped these orders, that is should have 
anticipated the kinds of obstacles that would arise and 
included preventative provisions in the original court 
order. Perhaps some such steps could have been taken. 
On the other hand, even the court's initial order in 
1969 went well beyond what any court had done 
previously to remedy discriminatory practices in the 
public housing program. It constituted a very signifi- 
cant intervention in the program and the activities of 
the local and Federal agencies involved. The order 
aroused hostile reactions for its intrusiveness as well as 
because of the controversial nature of the substantive 
issue of equal opportunity in housing. In the housing 
area, as in the school desegregation area, there is many 
a slip between the cup and the lip. There is a great gap 
between establishing a legal principle and applying the 
principle to change institutional practices. This is 
particularly evident where the development process is 
a complex one, involving local and Federal approvals 
and actions by property owners, contractors and other 
actors whose cooperation is needed to facilitate the 
construction of public housing. 

Gautreaux: The HUD Case 

When the Gautreaux litigation began in 1966, there 
were actually two cases, one against CHA (discussed 
above) and the other against HUD. While the court 
considered the CHA case, it held the HUD case in 



31 



abeyance. In 1971, the plaintiffs revitalized the HUD 
portion of the case. The Federal court of appeals then 
found that HUD had also violated the rights of the 
plaintiffs, by approving and funding the discriminato- 
ry public housing program in the city. In 1976, the 
U.S. Supreme Court decided that it would be permissi- 
ble for the district court to require HUD to take 
remedial initiatives throughout the metropolitan area 
and left it to the lower court to determine whether 
relief beyond the city limits was appropriate and 
necessary in this case. The Supreme Court's decision 
set the stage for the plaintiffs and HUD to enter into a 
series of voluntary agreements on remedial initiatives 
in the Chicago suburbs, culminating in 1981 in a 
"consent decree" that was accepted by the Federal 
district court. The centerpiece of these agreements has 
been a HUD-funded initiative to assist low-income 
minority families to move into existing private rental 
housing, particularly in the predominantly white 
middle-income suburbs. Thus, the portion of the 
Gautreaux case implicating HUD has added a focus 
both on the suburbs and on the use of the existing 
private housing market to expand the opportunities of 
families in the plaintiff class. Implementation of these 
new initiatives was to depend on the section 8 
subsidized housing program, a Congressional creation 
of the Housing and Community Development Act of 
1974. Although the case began with a challenge to the 
administration of the traditional public housing pro- 
gram, the court incorporated the new subsidy program 
into the remedial scheme with a metropolitan-wide 
thrust. 

The Leadership Council has administered the 
"Gautreaux Program" since its inception in 1976. The 
program has assisted over a thousand low-income 
minority families to move into private rental housing 
throughout the Chicago metropolitan area with Feder- 
al rent subsidies paying a portion of their rent. The 
program has relied heavily on the "existing housing" 
component of the section 8 program. Leadership 
Council staff has solicited the participation of private 
landlords and management firms in the program. As a 
result, low-income families have moved into middle- 
income developments without controversy or visibili- 
ty, for the most part. Because of this "invisibility" 
feature and the lack of delays inherent in new 
construction, the Leadership Council's program has 
assisted far more families in the five years of its 
operation than CHA has through new construction in 
the twelve years since the court ordered it to increase 
the supply of public housing as rapidly as possible. 



A decade and a half after the initiation of the 
Gautreaux litigation, controversy continues to swirl 
around the case. The legal principle at stake was a 
clear one. The case carried over the principle estab- 
lished in Brown v. Board of Education into the public 
housing arena. And the court found a clearcut case of 
intentional discrimination. Having done so, however, 
the court found that its efforts to vindicate the 
constitutional rights of the plaintiffs met obstacles at 
every turn in the road. The process of converting the 
legal principle into housing realities has been slow and 
painstaking, and it is far from over. The consent 
decree adopted in 1981 contemplates that it will take 
another decade or more to provide full relief in the 
case. 

Exclusionary Zoning Litigation 

Litigation in the area of exlusionary zoning seeks to 
remove local land use barriers to the construction of 
housing for low and moderate-income people. In the 
Chicago area, cases in Arlington Heights and DuPage 
County have demonstrated the strengths as well as the 
limitations of this use of the courts. As in the 
Gautreaux-ty\)t case challenging discriminatory ad- 
ministration of subsidy programs by public agencies, 
the exclusionary zoning cases face obstacles both in 
achieving the judicial victory and then in converting 
that victory into concrete advances in housing. In 
these zoning cases, establishing that the plaintiffs' 
legal rights have been violated may be very difficult. 
Securing relief in victorious cases may be feasible if the 
purpose of the case is to remove the obstacle to 
building a particular proposed housing project. But if 
the purpose of the case is broader — to change the land 
use system to reduce development costs and facilitate 
building of subsidized housing generally in the juris- 
diction, the remedial problems take on a complexity 
akin to that in the Gautreaux case. 
The Arlington Heights Case 

Arlington Heights is a predominantly white middle- 
income suburb about 25 miles northwest of Chicago's 
loop. A decade ago, the Metropolitan Housing Devel- 
opment Corporation (MHDC), a non-profit builder of 
racially mixed subsidized housing, decided to build a 
subsidized development in Arlington Heights. The 
opportunity arose because the Clerics of St. Viator 
owned an 80-acre parcel of land in the village. A high 
school and the novitiate occupied a portion of the site. 
The clerics decided that subsidized housing would be 
an appropriate use of another part of the site. They 
agreed to make the site available for a below-market 



32 



price to MHDC for construction of Federally assisted 
multi-family housing. However, the village had zoned 
the area for single-family housing. MHDC requested 
that the village rezone the site to permit two-story 
multi-family buildings, but the village denied the 
request. MHDC then sued the village, claiming that 
the failure to change the zoning constituted a violation 
of the equal protection clause of the Constitution and 
Title VIII of the Civil Rights Act of 1968— the 
Federal fair housing act. In 1977, the case reached the 
U.S. Supreme Court, which ruled only on the constitu- 
tional claim. The Court found that MHDC had not 
demonstrated that the village had a racially discrimi- 
natory purpose in denying the rezoning and that such 
a showing was necessary to establish a constitutional 
violation. In so holding, the Court reiterated a position 
it had taken shortly before the Arlington Heights case, 
in a police discrimination case from Washington, D.C. 
In that case, the Court said that a constitutional 
violation must be based on a racially discriminatory 
purpose by a governmental body; it is not enough that 
the actions burden racial minorities more heavily than 
whites. Thus, Village of Arlington Heights v. MHDC 
applied the general requirement of proof of discrimi- 
natory purpose to the zoning situation. Arlington 
Heights appeared to be carrying out its traditional 
land use control prerogatives in this case, following a 
community plan of separating single-family homes 
from apartment developments. Without proof that it 
was doing so in order to exclude racial minorities from 
the town, the Court concluded that there was no 
constitutional violation. 

However, the Court recognized that a different 
standard of proof might be warranted under Title 
VIII — that Congress might have intended the fair 
housing act to apply to some situations where actions 
were not racially motivated but had a discriminatory 
effect. Since the court of appeals had not addressed the 
question of how Title VIII applied to Arlington 
Heights's actions, the Supreme Court sent the case 
back to the court of appeals in Chicago to do so. The 
court of appeals concluded that a showing of the 
discriminatory effect of the village's actions could be 
sufficient to establish a violation of the fair housing 
act. It then sent the case back to the trial court to 
determine whether there was such a violation in this 
case. At that point, MHDC and Arlington Heights 
decided to settle the case rather than continue to 
engage in what had become an extended lawsuit. They 
found an alternative site on which the development 
could proceed, a decade after the first efforts by 



MHDC to secure the approval of village officials for 
the project. 

The Arlington Heights case demonstrated that it 
may require an egregious situation to demonstrate that 
exclusionary zoning practices are racially motivated 
and thus constitute a violation of the Constitution. On 
the other hand, the trial court still has a great deal of 
discretion to sift through the facts of these cases and 
make a determination about the existence of discrimi- 
natory motivation. Beyond that, the Arlington 
Heights case indicates (along with other Federal 
cases), that the federal fair housing act may prohibit 
land use control decisions that have a racially discrim- 
inatory effect even if that is not their purpose. The 
U.S. Supreme Court has not ruled on this question yet, 
so the ultimate utility of Title VIII in exclusionary 
zoning cases remains an open question. Finally, the 
Arlington Heights case demonstrates that even a 
lawsuit focused on the decision of a single municipal- 
ity with respect to one proposed development may 
take many years to resolve. This decision was a decade 
in the making. The provision of housing at the end of 
the litigation depended on great persistence on the 
part of MHDC, financial resources to support the 
effort and the fortuity of the continued availability of 
necessary federal subsidy funds. 
H.O.P.K, Inc. V. County of Du Page 

In a suit filed around the same time as the Arlington 
Heights case, fair housing groups in west suburban 
DuPage County claimed that the county and housing 
developers operating there had worked together to 
keep low and moderate-income people and racial 
minorities out of this predominantly white, relatively 
affluent area. Rather than focusing on a particular 
instance of the administration of the zoning ordinance, 
as in Arlington Heights, these groups suggested that 
the overall zoning policies and practices deterred 
developers of subsidized housing from even trying to 
build these kinds of projects in the unincorporated 
areas of the county, where the county zoning officials 
had jurisdiction. The county imposed requirements 
that made it difficult to secure approval for multi- 
family developments. The organizations bringing the 
case argued that these requirements, coupled with the 
county's repeated statements of its opposition to 
subsidized housing, resulted in an absence of proposals 
for subsidized housing. 

The plaintiffs in this case had an obstacle to 
overcome in just getting the judge to hear the case. 
Unlike the Arlington Heights case, there was no 
specific proposal that the parties were contesting. In 



33 



Worth V. Seldin. the U.S. Supreme Court had decided 
that individuals and organizations that objected to the 
zoning pohcies and practices of a Rochester, New 
York, suburb could not challenge those practices 
because there was no proposed project at issue. The 
Court said that the case was too speculative because 
there might not be any proposed developments even if 
the Court took the case and found that these practices 
violated the law. And the absence of such proposals 
might simply be a function of the high cost of land in 
the town rather than any zoning barriers that the 
officials erected. 

The Supreme Court decided the Warth case in 1975, 
while the DuPage County case was before the federal 
court in Chicago. It cast a pall over efforts to use the 
federal courts to challenge suburban exclusionary 
practices. Some suggested that the case meant that the 
more exclusionary a community was, the less chance 
there was of challenging those practices in court. The 
Arlington Heights case provided a glimmer of hope, 
however, since it came after Warth and the Supreme 
Court concluded that MHDC did have "standing" to 
bring its case because there was a specific project and a 
specific zoning decision. The Court found that if that 
local decision was invalidated, there was a substantial 
probability that the project would actually be built and 
that low-income minority plaintiffs would move into 
it. But the DuPage County case faced a much stifTer 
hurdle in overcoming the limitations imposed by the 
Supreme Court in the Warth case. There was no 
specific proposed project in controversy. There was no 
one specific zoning decision at issue. Instead there was 
a pattern of land use policies and practices that the 
plaintiffs argued had the purpose and effect of 
excluding low and moderate-income people and racial 
minorities. Nevertheless, the trial judge found that the 
plaintiffs had a right to bring the case because of their 
argument that the county and the developers had 
worked together to carry out these exclusionary 
practices. That is, the developers that might have 
made the specific proposals and might have been 
resisted by the country were instead conspiring with 
the county, according to the fair housing groups, to 
keep out subsidized developments. In that situation, 
the court found that it would not be reasonable to 
require that there be a specific development to make 
the case concrete when the developers were allegedly 
working actively to exclude such developments. 

Having concluded that the fair housing group had a 
right to be in court — that it had "standing" to bring 
the case — the trial court considered whether the 



county's practices violated the constitutional rights of 
the plaintiffs. The judge began by reiterating the 
principle articulated by the Supreme Court in the 
Arlington Heights case that it would not be sufficient 
to show that the county discriminated on economic 
grounds or that the county's actions had a racially 
discriminatory effect. Since this was a constitutional 
case (the events had taken place before the federal fair 
housing act went into effect), H.O.P.E. had to show 
that the county's actions were racially motivated. 
Discrimination did not have to be the sole purpose for 
the actions, as long as it was part of what led the 
county to carry out its zoning policies in a way that 
excluded minorities. In an October 1981 decision, the 
district judge concluded that racial discrimination was 
at work in these decision-making processes. No direct 
and clear evidence of racial motives was in the record; 
but when the Supreme Court said in the Arlington 
Heights case that proof of discriminatory purpose was 
necessary, the Court recognized that direct, blatant 
proof would not usually be available and that circum- 
stantial evidence would suffice. The trial court in the 
DuPage County case picked up on that theme and 
found that various bits of circumstantial evidence 
added up to a conclusion that discriminatory purposes 
were involved in the county's zoning policies and 
practices. The opposition to subsidized housing, the 
presence of minorities working in the county but the 
virtual absence of minorities living in the county, the 
opposition of county residents to minorities moving in 
and other pieces of circumstantial evidence led the 
judge to conclude that the county's motivations 
inclkuded a desire to exclude minorities. The county 
has denied throughout the lawsuit that its actions 
involved racial bias and it has decided to appeal this 
decision. The Court of Appeals is likely to give 
deference to the trial court's findings on the facts, but 
it may still scrutinize those findings to determine 
whether they support the conclusion that the county 
had a racial purpose and to determine whether the 
lower court used the correct legal test. 

Meanwhile, the district court requested suggestions 
as to the appropriate remedies for the constitutional 
violations which it found. Thus began the process of 
converting the legal victory into increased housing 
opportunities (assuming the court's decision on the 
violation is upheld on appeal). Plaintiffs are asking the 
court to impose "inclusionary" requirements on the 
county, to remedy the exclusionary practices of the 
past. Such requirements not only call for a change in 
the zoning provisions that deterred subsidized devel- 



34 



opment, but mandate affirmative action to see to it 
that private developments include a component for 
low and moderate-income people and that the county 
provide incentives to encourage developers to move in 
this direction. Even if the DuPage County decision is 
affirmed on appeal, however, and even if the judge 
adopts the "inclusionary" orders that H.O.P.E. is 
seeking, the implementation problems illustrated by 
the Gautreaux case are likely to crop up. 

Thus, exclusionary zoning cases encounter a series 
of obstacles on the road to expanding housing oppor- 
tunities for the poor and minorities. In the federal 
courts, at least, it will be difficult to persuade a court 
that the plaintiffs are entitled to bring the case unless 
there is a specific proposed project for a specific parcel 
of land that will probably be built and occupied by 
minorities if the zoning change that is sought is 
granted. If those plaintiffs gain "standing," they must 
then show that the local zoning officials have inten- 
tionally excluded racial minorities in order to show 
that there has been a violation of their constitutional 
rights. In the alternative, they maybe able to show that 
their rights have been violated under the Federal fair 
housing act if the zoning practices have had a 
discriminatory effect and local officials do not have an 
adequate justification for their actions. Although the 
Court of Appeals in Chicago and in some other parts 
of the country have adopted this view of the Federal 
statute, othes have said that intentional discrimination 
is necessary under the fair housing act as under the 
Constitutional challenge. The U.S. Supreme Court has 
not ruled on this issue, so it remains an open question. 
In the Arlington Heights, single-site type case, per- 
suading the court that the local officials have violated 
the rights of the developer or minority potential 
residents may pave the way to a relatively straightfor- 
ward remedy — changing the zoning to remove that 
obstacle to construction. In the broader case that seeks 
to overturn exclusionary practices throughout a juris- 
diction, developing an effective remedy and imple- 
menting it constitute difficult and time consuming 
challenges for civil rights groups and the courts alike. 

Although the discussion so far has focused on the 
federal courts, where the Chicago-area housing litiga- 
tion has taken place, some of the most advanced 
exclusionary zoning cases have been decided by state 
courts. The New Jersey Supreme Court has delved 
more deeply into these matters than any other state 
supreme court. It has permitted poor and minority 
non-residents to sue a municipality because of its 
exclusionary practices even when there is no proposed 



subsidized development. It has decided that economic 
discrimination — exclusion of low and moderate-in- 
come housing — violates the New Jersey state constitu- 
tion unless there is a very strong justification for the 
actions that have this intent or effect. Moreover, the 
New Jersey supreme court has indicated that a remedy 
for invalid zoning practices may include affirmative 
steps to make it feasible, from a land use standpoint, to 
provide housing for those that could not afford to live 
in the muncipality. That state court has not yet 
clarified the extent to which municipalities must go to 
expand opportunities once a court has found that they 
have been unjustifiably exclusionary; but the New 
Jersey court has clearly been more expansive in its 
vision of local municipalities' obligations to lower- 
income and minority non-residents than the Federal 
courts. 

Other state courts, however, have been less sympa- 
thetic to the claims of excluded racial and economic 
minorities. In deciding matters of state law, state 
courts have a great deal of autonomy. The U.S. 
Supreme Court is very reluctant to review decisions of 
state courts that interpret state constitutional provi- 
sions. The result is a patchwork quilt of state court 
decisions relating to exclusionary zoning, all of which 
may be the final word on the matter in their respective 
states. In short, the question of the potential for 
litigation to challenge exclusionary practices depends 
on the availability of both the Federal and state courts 
and the prospects and problems in each of those 
arenas. The Illinois courts have generally had a rather 
narrow view of who is entitled to challenge the impact 
of a zoning action. They have usually required that a 
person own property in the municipality in order to be 
able to attack the local officials' actions. There have 
been some exceptions, however, and the Chicago 
Lawyers' Committee for Civil Rights under Law is 
engaged in research on this and other matters related 
to the potential for exclusionary zoning litigation in 
the Chicago area. The Illinois state courts have not 
had much experience with these questions compared 
to the courts of New Jersey, New York and Pennsyl- 
vania, so it is not certain what the Illinois courts' 
response would be, on questions of "standing," stan- 
dards of proof, legal theories or remedies in the event 
that the local actions were found to be in violation of 
the law. 

Prospects for the Future 

The discussion to this point has emphasized the 
experience in litigating in pursuit of equal opportunity 



35 



for lower-income minorities in the Chicago metropoH- 
tan area. That history suggests some courses of action 
that hold potential for future advances toward this 
critical objective. The following is a listing of matters 
that warrant attention as part of this continuing quest. 

1. Future Funding of Federal Housing Programs: In 
order to pursue equal housing opportunity through 
subsidized housing programs, the federal programs 
must continue to exist and to receive funding from 
Congress at significant levels. With the cutbacks in 
federal programs, the housing programs are particu- 
larly vulnerable to emasculation if not outright extinc- 
tion. They are relatively expensive programs that 
benefit those with limited political influence. And they 
have built-in problems of equity since they provide 
substantial subsidies to some of those who are eligible 
and no aid to many others that are equally in need. 
Nevertheless, these programs have provided important 
benefits to the poor and minorities, those that are most 
likely to be ill-housed. The prospects for the pursuit of 
equal opportunity goals for low and moderate-income 
people are heavily dependent on the continuation of 
some form of federal housing assistance, supplemented 
by state and local efforts. 

2. Implementation ofCHA 's Scattered Site Program: 
The federal government has made funds available for 
the program of scattered site construction and acquisi- 
tion of housing in Chicago proposed by CHA and 
adopted by the federal court in 1979. This program 
has begun to make progress, through the efforts of 
CHA staff hired for this purpose. At the same time, 
city officials have shown ambivalence towards the 
program that could impede its progress. Although 
Mayor Byrne announced her public support for the 
program in 1979, she recommended in the fall of 1981 
that the funds targeted for it be reallocated to the 
maintenance of existing public housing projects. CHA 
is operating at a very substantial deficit, but the 
agency is attempting to develop a financial plan to 
deal with that problem. It must do so without 
jeopardizing ongoing efforts to provide long-overdue 
relief for the victims of unconstitutional racial dis- 
crimination. Moreover, the scattered site program 
receives from a different Congressional appropriation 
than the one involved in financing the maintenance of 
existing housing projects. It may be that in suggesting 
reallocations of funds local officials are reacting in 
part to continuing opposition in predominantly white 
neighborhoods even to the small scattered site devel- 
opments proposed for their areas. This opposition 
persists in spite of the small size of the proposed 



developments and the priority for occupancy of a 
portion of the units to neighborhood residents. That 
opposition may not provide the basis for delaying the 
vindication of constitutional rights. 

3. Implementation of the Leadership Council's Gau- 
treaux Program: The Leadership Council for Metro- 
politan Open Communities has carried out its pro- 
gram of placing "Gautreaux class" families in private 
housing throughout the metropolitan area for more 
than five years. HUD has committed itself to contin- 
ued funding of this and other programs until complete 
relief has been provided in case, as defined by the 
parties and the court in the 1981 consent decree. This 
program is therefore central to the remedy in the case 
and the point above about the need for future funding 
is particularly relevant to this activity. Even if there 
are cutbacks in Section 8 subsidy funds nationally, 
HUD must ensure that this program continues to 
operate at the agreed upon level. And the follow-up 
services that the Leadership Council provides to 
families as they make the difficult adjustment to a new 
and very different environment must continue to be 
supported. 

Northwestern University's Center for Urban Affairs 
and Policy Research is currently undertaking a study 
of families moving to the suburbs through this 
program. The study is examining the educational and 
social effects of this move on the families, particularly 
the children that move from inner city schools to 
predominantly white, middle-income schools in subur- 
bia. This two and one-half year study should provide a 
greater understanding of the nature of this transition 
for the families involved and should be helpful in the 
future administration of this and other similar pro- 
grams that might be established throughout the 
country. 

4. Monitoring of the Gautreaux Consent Decree: 
Although the Leadership Council's program is central 
to the Gautreaux consent decree, the decree contains 
other important initiatives as well. The most signifi- 
cant of these attempt to deal with perhaps the most 
intractable problem in this area — the provision of 
adequate, affordable housing for large low-income 
families. The Leadership Council's program has assis- 
ted relatively small families for the most part, because 
of the scarcity of large apartments within the pro- 
gram's rent ceilings that landlords are willing to make 
available for this purpose. Thus, the consent decree 
tries to increase the supply of housing for large 
families through construction and acquisition incen- 
tives. Implementation will be difficult and will require 



36 



careful monitoring as well as modificatin of these 
initiatives as problems arise in carrying them out. 
Lawyers for the plaintiffs have taken on that task, but 
other civil rights agencies could serve a useful purpose 
in monitoring the implementation process and making 
recommendations for adjustments to the undertakings 
specified in the consent decree. 

5. Exclusionary Zoning Litigation in the State 
Courts: Because of the advances made in the state 
courts such as New Jersey, it is worthwhile to explore 
very carefully the potential for state court suits in 
Illinois, in light of the legal precedents and the land 
use policies and practices of Chicago area suburbs. 
The Lawyers' Committee for Civil Rights under Law 
and the Center for Urban Affairs and Policy Research 
of Northwestern University have been engaged in legal 
and empirical research, respectively, in this area. That 
work may provide the basis for exploring litigation 
possibilities in the state courts. 



6. Exclusionary Zoning Litigation in the Federal 
Courts: The Arlington Heights and DuPage County 
cases, as well as federal cases from other parts of the 
country, provide the basis for additional federal court 
cases in the Chicago area. Arlington Heights-type 
cases are necessary only when a proposed housing 
project may not proceed because of local zoning 
constraints. The broader cases represented by the 
DuPage County lawsuit do not depend on such an 
incident. They have the advantage of striking at a 
whole pattern or practice of exclusion; but they have 
the corresponding disadvantages of an uphill battle in 
court and at the remedial state in the event the court 
finds a violation of law. Great care should be exercised 
in developing a strategy for such cases, including 
careful factual research, identification of appropriate 
plaintiffs, legal theories and proof and the examination 
of potential "inclusionary" remedies that will produce 
real housing opportunities rather than phyrric victo- 
ries. 



37 



The Dual Housing Market in the Chicago 
Metropolitan Area 

by Kale Williams, Leadership Council for Metropoli- 
tan Open Communities 

Origins Of The Dual Housing Market 

The Kemer Commission stated clearly the choices 
before us. "This is our basic conclusion: our Nation is 
moving toward two societies, one black, one 
white. . . .To pursue our present course will involve 
the continuing polarization of the American commu- 
nity and, ultimately, the destruction of basic demo- 
cratic values."' The Kemer Commission recognized 
that racial segregation in housing was the major factor 
in present day polarization, and recommended, "We 
believe that the only possible choice for America 
is. . .a policy which combines ghetto enrichment with 
programs designed to encourage integration of sub- 
stantial numbers of Negroes into the society outside 
the ghetto."^ 

The policy of ghettoization, the creation of racially 
distinct neighborhoods, was consciously adopted at a 
particular time, was implemented and reinforced by a 
variety of private and governmental actions, and has 
resulted in an on-going, pervasive, institutional system 
which is described as a dual housing market, one for 
blacks and other minorities, one for whites. This 
policy is in a direct line of descent from slavery. "Just 
as the Black Codes, enscribed after the Civil War to 
restrict the free exercise of those rights were substi- 
tutes for the slave system, so the exclusion of Negroes 
from white communities became a substitute for the 
Black Codes. And when racial discrimination herds 
men into ghettos and makes their ability to buy 
property turn on the color of their skin, then it too is a 
relic of slavery."' 

In 1917, when blacks were moving in large numbers 
to Chicago, the Chicago Real Estate Board appointed 
a committee to make recommendations on how to deal 
with the "Negro problem." That committee reported, 
"The Committee appointed. . .to take immediate 
action and expedite plans to notify and assist owners 
of property coveted and demanded by the negro race 
for negro occupation begs to report as follows: . . . 
Inasmuch as more territory must be provided, it is 



' Report of the National Advisory Commission on Civil Disorders, 

(March 1968) p. 1. 

' Report, p. 10. 

' Jones V. Mayers. 392 U.S. 409 (1969). p. 441 . 

* Chicago Real Estate Board Bulletins. XXV, Nov. 4 (April 1917), 

p. 316. 



desired in the interest of all, that each block shall be 
filled solidly and that further expansion shall be 
confined to contiguous blocks and that the present 
method of obtaining a single building in scattered 
blocks, be discontinued."" 

The report was adopted, and implementing mea- 
sures begun, the first proposal of a municipal ordi- 
nance to restrict residence of blacks to certain areas. 
When that approach was struck down by the U.S. 
Supreme Court,- the real estate profession implement- 
ed the same policy by incorporating this restriction in 
its code of ethics, by the organization of home-owner's 
associations in white areas, and by adding restrictive 
covenants to property deeds. 

These efforts were markedly effective, creating a 
black ghetto on Chicago's south side, and limiting 
growth of the black community to expansion at the 
edges of that ghetto. As a result Chicago became, and 
continues to be, one of the most racially segregated 
areas in the country, and the patterns adopted here 
have been copied in almost every major metropolitan 
area. 

The patterns were adopted, too, by the federal and 
state governments as they began in the 1930s to 
intervene directly in the housing market through 
funding public housing and insuring home-owners' 
mortgages. Those programs operated within the dual 
housing market, separating people by race, and 
discriminating against blacks in access to housing and 
related insurance programs. 

While the dual housing market was being formed 
and solidified, opposition to it was growing, too, 
mainly through Constitutional challenges to housing 
discrimination. The decision of the U.S. Supreme 
Court in 1948 that restrictive covenants were unen- 
forceable was the first major victory since 1917," and 
was the opening signal for a series of judicial, 
administrative, and legislative acts challenging racial 
discrimination in housing which culminated in 1968 
with the passage of a federal fair housing law by 
Congress and the decision by the U.S. Supreme Court 
that the 1866 Fair Housing Law was valid and 
enforceable. 

The leadership of the organized real estate industry 
first designed and imposed the system of housing 

Quoted in Helper, Rose, Racial Policies and Practices of Real Estate 
Brokers. University of Minnesota Press (1969), p. 225 
' Buchanan V. Warley. 245 U.S. 60(1917). 
• Shelley v. Kramer. 334 U.S. 1 (1948). 



38 



segregation and the successive mechanisms by which it 
was sustained, then resisted vigorously the enactment 
of fair housing laws, and, after fair housing laws were 
enacted, opposed effective enforcement and argued 
instead for voluntary compliance. 

In 1980 this consistent thread of opposition to racial 
equality in housing was seen again in the real estate 
industry's opposition to amendments to strengthen 
federal fair housing law; their opposition was instru- 
mental in defeating the proposed amendments in the 
Senate. 

This approach has not been universal and many 
individual real estate brokers have supported open 
housing measures and have conformed their own 
practices to the law. In fairness, it must be said, too, 
that some of the educational materials prepared for 
real estate professionals by their professional associa- 
tions have been excellent. 

Even with those caveats, it is my judgment that the 
real estate marketers are now the most important 
bastions of the dual market system. At an earlier time, 
it might plausibly be argued that these gatekeepers to 
housing were reflecting the sentiments of the majority 
of whites who were their major constituents. Now 
public opinion polls, and the experience of black 
residents in previously all-white areas, all testify to a 
very wide acceptance of racial diversity in housing by 
whites and blacks. Such acceptance is by no means 
unanimous, but it is now, apparently, a majority 
overall, and a significant force even in neighborhoods 
with a reputation for hostility to blacks. The onus for 
continued discrimination in the all-white enclaves, and 
for the pervasive racial steering in many communities 
rests squarely on the real estate marketers. 

The Present Situation 

The Chicago metropolitan area remains largely a 
segregated area, and most black home-seekers are 
housed within the black segment of the dual housing 
market. These are the major conclusions to be drawn 
from an analysis of 1980 census data.' 

Although this is the predominant pattern, there has 
been modest progress in opening previously closed 
areas to blacks, and an increase in the number of areas 
which are experiencing a significant increase in black 
population. 

Like other major metropolitan areas in the Chicago 
metropolitan area, between 1970 and 1980, black 



The figures in this section are drawn from reports of the U.S. 
Bureau of the Census and reported in "Chicago's Dual Housing 



population grew more rapidly in the suburbs than in 
the city. 

Black population growth in the suburbs was 
102,000, in the city, 94,000. 

Total black population was 1,427,825, an increase of 
196,906, or 16 percent between 1970 and 1980. In 
1980 blacks comprised 20.1 percent of total popula- 
tion. 

Blacks in Chicago totaled 1,197,000, or 39.8 percent 
of the total city population. In the suburbs, black 
population was 230,825, or 5.6 percent of total 
suburban population. 

Other minority populations also grew significantly 
in the decade. But these minority group members have 
moved to more communities, and the concentrations 
of these minority group members are fewer and 
smaller than in the case with blacks. This pattern of 
residence suggests that discrimination in housing is 
less severe against these groups than against blacks. 
This conclusion is bolstered from an analysis of the 
complaints of housing discrimination reaching the 
Leadership Council and other fair housing enforce- 
ment agencies. In about 95 percent of such complaints 
the persons discriminated against are black. In the 
recent past, the remaining small proportion of com- 
plaints has been registered by Hispanics, Asians, and 
Jews. In almost every case of discrimination against 
Hispanics and Asians brought to our attention, the 
persons discriminated against were of dark skin color. 
The complaints of discrimination against Jews origi- 
nated in a small section of Chicago's affluent near 
north lakefront. 

I conclude, then, that the dual housing market as a 
systematic set of marketing institutions designed to 
separate people by race and ethnicity now operates 
primarily to separate blacks from other residents, and 
tends to operate against other racial and ethnic 
minorities when they are dark skinned. 

In the past, the dual housing market could be 
characterized rather simply: areas where blacks were 
heavily in the majority; certain areas, usually at the 
edges of the predominantly black areas, which were in 
transition from white to black; and the rest of the 
areas where few blacks or none lived. The first two 
comprised the black segment of the dual housing 
market, and black population growth occurred mainly 
in the transition areas. The real estate market operated 
to exclude blacks from the remaining, white, segment 

Market: 1980. A Report from the Leadership Council for metropoli- 
tan Open Communities," (1980). 



39 



of the dual housing market, and fostered a process of 
rapid racial transition from white to black occupancy 
in the transition areas, leading to a resegregated 
neighborhood and to a repeat of the transition process 
in the next neighborhood. 

The 1980 census reveals that this is still the 
predominant pattern. Between 1970 and 1980, black 
population increased by 220,401 in 13 Chicago com- 
munity areas which were predominantly white in 1970 
but which were immediately adjacent to areas which 
were predominantly black in 1970. There was an 
almost equivalent loss of black population from older, 
inner city black communities due, not to displacement, 
but to a reduction in housing stock from deterioration 
and abandonment. The massive character of this 
transfer of population can be appreciated when trans- 
lated as follows: in the community area of Austin, on 
Chicago's west side, white population decreased by 
56,341 and black population increased by 60,267 in 
the decade. This represents an average migration of 
about 4 black families into this small area every week 
throughout the decade. 

A similar, though less dramatic, process of growth 
at the edges of existing predominantly black areas, 
took place in such suburban cities as Waukegan, 
Aurora, Chicago Heights, Elgin, Evanston, Harvey, 
Joliet, Markham, Maywood, North Chicago and Zion. 

In contrast, there remained in 1980 177 suburban 
communities and 26 city community areas where the 
black population was less than one percent. 

Thus, the earlier characterization of the dual 
housing market still applied, in large measure, to the 
Chicago metropolitan area in 1980. There were some 
changes in that pattern, changes described earlier as 
"modest progress." Most striking was the larger 
number of community areas where there was signifi- 
cant growth in black population but where there were 
still large proportions of white residents. Fourteen of 
these were communities to which blacks moved in 
significant numbers for the first time in the decade and 
where the proportion of black residents was between 
10 percent and 30 percent (plus or minus ten percent 
from the 20 percent proportion of blacks in the total 
population in the metropolitan area) in 1980. In some 
of these communities blacks were concentrated in 
particular developments or neighborhoods and in 
some a transition was in process, but the number of 
such communities was an increase over 1970, and thus 
the pressure of black demand for housing was spread 
over more communities, making resegregation less 
likely, or at least less imminent, in each community. 



In several others a transition had proceeded further 
and the percentage of black population exceeded 30 
percent. 

Although they may presently be called racially 
diverse, or "balanced" communities, they should be 
counted as part of the black segment of the dual 
housing market because, for the most part, real estate 
marketers steer blacks to those communities and 
whites away from them. This conclusion is based on a 
series of studies of marketing practices using black and 
white testers conducted by the Leadership Council 
and other fair housing agencies. 

The Work of the Leadership Council 

The Leadership Council for Metropolitan Open 
Communities was founded in 1966 by the Chicago 
Conference on Religion and Race. It was a direct 
outgrowth of a campaign for open housing led by civil 
rights leaders Dr. Martin Luther King, Jr. and Albert 
Raby, and of a meeting of civic, business, religious, 
civil rights, labor and government leaders at the end of 
that summer. Its board of directors continues to 
represent the leadership elements which founded it. 
The programs of the Council have developed and 
expanded over the years in an attempt to provide a 
comprehensive set of strategies to transform the 
discriminatory dual housing market into a single 
housing market, free of racial and economic discrimi- 
nation. 

Those programs now include the following: 
1 . Enforcement affair housing laws. 
The Council provides investigators and lawyers to 
bring appropriate action on behalf of individuals 
who encounter discrimination in their search for 
housing. Usually the action has been private civil 
suits in federal court, but, increasingly, administra- 
tive procedures in the Department of Housing and 
Urban Development (HUD), the Illinois Depart- 
ment of Human Rights (IHRD), and Chicago 
Department of Housing are used. The Council also 
provides legal representation for municipalities and 
community organizations in suits to stop racial 
steering, and for other individuals and organizations 
which encounter an institutional practice related to 
housing discrimination. 

Examples of the latter categories are cases charging 
exclusionary zoning or discrimination against black 
real estate professionals in real estate boards or 
multiple listing services. 

The Council has handled some 600 fair housing 
cases, with about 90 percent success rate. Many of 



40 



the cases have estabhshed important precedents to 
extend the coverage of fair housing laws, including 
two cases decided by the U.S. Supreme Court.* 

2. Marketing of housing opportunities to minorities. 
The Council, through the Fair Housing Center, 
formerly a program of Home Investments Fund, 
advertises to minority families the availability of 
housing throughout the market area, and provides 
counseling and assistance to those who wish to 
move outside the dual housing market boundaries. 
Advertisement is primarily through radio and 
television public service announcements. Counsel- 
ing covers the whole range of tenant and home- 
owner considerations in addition to location and 
assistance, including referral to local volunteers, 
cooperative real estate agents and lenders, and, in 
some cases, a down-payment loan covered by a 
second mortgage. 

3. Location of assisted housing. 

The Council has a program of planning and 
advocacy to increase the supply and improve the 
distribution of housing for low and moderate 
income persons. Staff work with agencies of the 
federal and state governments to improve the 
available programs and their delivery and with local 
governments and developers to encourage well- 
planned developments in non-concentrated pat- 
terns. An earlier effort to improve the political 
acceptability in the suburbs for such housing was 
conducted in partnership with the Northeastern 
Illinois Planning Commission and a committee of 
12 suburban mayors. A recent study gives this effort 
a part of the credit for the increase from 5,000 to 
29,000 between 1978 and 1980 in the number of 
assisted housing units in the suburbs.' 

4. Assistance to low-income families. 

Through a contract with HUD, arising from the 
Gautreaux litigation,'" the Council assists members 
of the Gautreaux plaintiff class (residents of and 
applicants for Chicago public housing) to find 
housing in the private market using the Section 8 
subsidy. The Council enlists landlords willing to 
rent in this program, and counsels and assists 
eligible families. 



' Village of Arlington Heights v. Metropolitan Housing Development 
Corporation. 429 U.S. 1252 (1977) and Gladstone Realtors v. Village 
ofBellwood. 441 U.S. 91 (1979). 



Most of the families are black, single-parent house- 
holds; a high proportion receive public assistance. 
Since the program began in 1976, about 1,250 
families have been assisted, 970 in suburban loca- 
tions, 280 in the city. The turnover is lower than in 
most conventional and subsidized developments, an 
indication of tenant and landlord satisfaction which 
is confirmed by independent studies of the program. 
The chief constraints on the program have been the 
shortage of rental housing for large families and the 
need for a car to reach most suburban locations. 
A companion program provides support services to 
the families assisted through direct counseling and 
referral to other agencies, and through group 
meetings for mutual support. 

5. Opening "closed" communities. 

In recent years, the Council has focused several of 
its programs on parts of the metropolitan area 
which, in housing stock and location, would be 
attractive to blacks, but which are effectively closed 
to blacks by discrimination in the real estate market 
and by past hostility to black residents. These areas 
include the northwest and southwest sections of the 
city, near west suburbs and southwest suburbs. 
Community workers will mobilize support for black 
residents within those communities, while the coun- 
seling and enforcement programs will try to encour- 
age and make possible moves by blacks to the areas. 
To the extent that official acts of commission or 
omission to preserve a segregated white community 
can be proved, the Council tries to extend the 
enforcement of the federal fair housing laws to 
cover proposed grants from federal agencies and to 
bring other remedial action. 

6. Assistance to integrated communities. 
Integrated communities in the midst of a dual 
housing market are particularly at risk for the 
reasons cited above. The Council has tried to assist 
such communities to remain integrated, that is, to 
continue to attract both white and minority home- 
seekers. Legal action to block racial steering has 
been the major activity; participation in the drafting 
of a model municipal fair housing ordinance recent- 
ly published by Northeastern Illinois Planning 
Commission (NIPC) has been another. 

* Elizabeth Warren, "Subsidized Housing in the Chicago Suburbs," 
Center for Urban Policy. Loyola University, (1981). 
'° Gautreaux v. Landrieu, 66 C 1459-60. 



41 



7. Public education. 

In the last year the Council has given renewed 
priority to programs of public education, to correct 
the mistaken impression on the part of many whites 
that the problem was solved by the passage of fair 
housing laws, and the impression of many blacks 
that nothing has changed and that they should 
confine their housing search to black and transition 
areas. 

In summary, the Council's programs are based on 
the premise that housing discrimination and segrega- 
tion are institutionalized in a dual housing market, the 
correction of which is a major social reform requiring 
multiple strategies applied over a period of time. 
Those strategies now include enforcement of fair 
housing laws, marketing of housing opportunities, 
increasing the supply of assisted housing, helping low- 
income families to find such housing, opening closed 
communities, assisting integrated communities and 
public education. As funds become available we expect 
to add programs to encourage racial and economic 
diversity in revitalizing neighborhoods, programs to 
link more directly housing and school desegregation, 
and increased effort to end systemic discrimination 
against minority real estate professionals, and in 
insurance and lending. 

Ending the Dual Housing Market 

Continued progress in opening the total housing 
market to blacks in the 1980's must take into account 
the changed realities of the housing market. These 
include a sharp reduction in the amount of newly 
constructed housing; a diminishing supply of rental 
housing, with accompanying lower vacancy rates; 
continued high interest notes, making mortgage fi- 
nancing for purchase or rehabilitation more difficult; a 
bewildering array of new lending instruments, most of 
which will require stricter underwriting standards: all 
of these the product of general economic conditions. 
All of them make it more, rather than less, difficult for 
the black family to compete for housing in the market 
place. There is a real danger that the modest progress 
begun in the last decade will slow to a halt in what is 
predicted to be the tightest housing market since 
World War II. 

Those concerned for open housing, therefore, have a 
vital stake in economic measures to increase the 
supply of housing so that normal vacancy rates and 
mobility patterns can prevail and that other essential 
measures to overcome the systematic effects of past 
discrimination may operate. The economic measures 



which might assure that production are beyond the 
scope of this paper. It is clear, however, that the 
private housing market cannot, under any foreseeable 
economic circumstances, produce affordable housing 
for low and moderate income people without subsidy, 
and, therefore, some form of federal housing subsidy is 
essential if this segment of our population is to be 
adequately housed. A later section will discuss this 
issue in greater detail. 

The essential measures to open the housing market, 
assuming an adequate supply of housing, include 
these: 

1. Public education. 

Current effort to open the housing market are 
limited by two contradictory, but widely-held 
myths. 

Many whites believe that the problem was solved 
with the passage of fair housing laws. The modest 
progress in some communities tends to confirm this 
view, as suburban whites see a few blacks on their 
commuter trains. The phrase, "Any black who has 
money can live where he wants to," expresses this 
view. In fact, black homeseekers encounter some 
discrimination in almost every part of the white 
segment of the housing market, and effectively total 
discrimination in large parts of it. 
This experience of discrimination tends to confirm 
the second myth, held among many blacks, that 
nothing has changed and nothing can be done. In 
fact, there are beginnings of change in many 
communities as we saw from the 1980 census, and 
the fair housing law has proved a highly effective 
remedy for housing discrimination where those 
encountering discrimination use it. 
The needed public education task — to teach white 
opinion leaders and real estate gatekeepers that the 
issue is still a critical one, and black homeseekers 
that changing conditions warrant their consider- 
ation of the total housing market — does not lend 
itself to slogans. It is a complex task which should 
engage the media, the academic and religious 
sectors of our society, and the public and voluntary 
agencies concerned with human rights and public 
policy to a far greater extent than is presently the 
case. This seminar of the U.S. Civil Rights Commis- 
sion can be an important contribution. 

2. Enforcement affair housing laws. 

While the private suit method of enforcing fair 
housing laws is highly effective where investigative 
and legal staff are available, as in Chicago, and 



42 



while this method must be retained as the backup 
for any system of administrative enforcement, the 
necessary changes in all housing markets are not 
likely to occur without a strengthened administra- 
tive enforcement procedure. The Fair Housing 
Amendments Act passed by the House of Represen- 
tatives, but not by the Senate, in 1980 provided 
much of what is needed. 

Short of that, there needs to be further progress in 
the already substantial cooperation among HUD, 
state and local enforcement agencies, and the 
private fair housing agencies. In particular, the state 
real estate licensing agency, the Illinois Department 
of Registration and Education (DRE), needs to be 
brought into the enforcement process. In the mid- 
1970's DRE began effectively to enforce its own 
fair housing standards. In recent years that effort 
was diminished by almost complete ineffectiveness. 
As an example of greater coordination, the Leader- 
ship Council is proposing a computerized system to 
track the progress of complaints in each of the 
enforcement agencies, to identify multiple offenders, 
and to monitor the sanctions applied as remedies. 

3. Enforcement against systemic discrimination. 
The dual housing market is ingrained in all parts of 
the housing system, and efforts to address this 
systemic discrimination need greatly to be in- 
creased. Title VI and Title VIII in Section 808d, 
provide the legal basis for vigorous action on the 
part of federal departments and agencies to deny 
their resources to local government where the 
benefits of the funds would not be available to 
minorities and/or where local practices do not 
conform to the fair housing policy of the United 
States. However, no effective procedures have been 
developed for implementing such action; and prog- 
ress toward the same end through administrative 
complaints and litigation has been slow. 
Enforcement of Executive Order 12259" and 
further litigation by the Department of Justice along 
the lines of U.S. v. Parma'- should be pressed. The 
groundwork for two such suits was laid in com- 
plaints filed with HUD by the Leadership Council 
against the municipalities of Cicero and Berwyn, 
Illinois. HUD, after investigation and after attempt- 
ed conciliation was unsuccessful, has recommended 



" Executive Order 12259 sets out the procedures through which 
federal departments and agencies shall cooperate in fulfilling the 
requirements of Title VIII. 



to the Department of Justice that suits be filed 
charging violation of the fair housing law. That 
recommendation is now pending. One of the battle 
cries of the civil rights movement was, "No tax 
dollar should go where a black citizen can't go." 
Congress agreed in Title VI. Now it should be 
enforced. 

4. Affirmative marketing. 

If the real estate industry were fully committed to 
free enterprise, the 20 percent of blacks in our 
population would be eagerly sought by real estate 
marketers. In fact, black homeseekers are seen by 
most of the industry as a problem, to be discouraged 
or repelled, or to be exploited in the black part of 
the dual housing market. Affirmative marketing to 
black homeseekers, to overcome the myths of the 
past, to provide information on housing opportuni- 
ties in unfamiliar locations and the assistance 
necessary to overcome the barriers, is an essential 
task. The organized real estate industry gives lip 
service to this need in a nation-wide voluntary 
affirmative marketing agreement with HUD. With 
few exceptions, this has proved to be a paper 
agreement, with little implementation. The gap has 
been filled by private voluntary agencies usually 
called fair housing centers. There are nine in the 
Chicago area, including one operated by the Leader- 
ship Council, and their work will be absolutely vital 
until the necessary reform in real estate practices is 
accomplished. 

5. Desegregation of the real estate industry. 

This sector of our economy, comprising hundreds of 
thousands of people, with powerful and effective 
trade associations, and with great influence over the 
supply and marketing of a resource essential to 
every person, is highly segregated, probably more so 
than any other comparable section of the economy. 
By claiming an independent status for their agents, 
they have won effective immunity from fair employ- 
ment laws. While admitting blacks, in recent years, 
to membership in previously white trade associa- 
tions, the actual conduct of real estate practice is 
rigidly segregated and attempts by black brokers to 
enter white markets have been resisted with all the 
power of the largest national trade association. 

" U.S. V. Parma. 81-3031 in the U.,S. District Court in Cleveland, 
Ohio, found that the municipality of Panna, Ohio had violated fair 
housing laws in perpetuating a segregated white community. 



43 



Application of fair employment laws to real estate 
employment, and pressing of such current litigation 
as Wilkes v. South Suburban Multiple Listing 
Services (MLS) and U.S. v. South Suburban MLS 
should be a high priority. '" 

6. Support for integrated communities. 
The Supreme Court has ruled that one of the 
purposes of the fair housing law is "to replace the 
ghettos with balanced patterns of integrated living." 
One of the encouraging developments of the last 
decade has been the emergence of a small number of 
suburban municipalities, deliberately committed to 
becoming, and remaining, diverse communities. 
Such conscious intent, and programs to back it up, 
are essential if such communities are not to become 
another statistic in the traditional pattern of racial 
transition described earlier. 

One essential is the elimination of racial steering, 
and the strong enforcement measures referred to 
above must encompass this persisting violation. The 
very nature of such steering requires that evidence 
be obtained by testers, black and white, in an 
organized study to determine market practices. 
While the courts have helped by broadening the 
definition of those who have standing to sue to stop 
racial steering, there has been a discouraging 
tendency in this Circuit to require a higher standard 
of proof of such violations than is the case for 
individual homeseekers. Further litigation and ad- 
ministrative enforcement is needed. 
In summary, most of the methods for furthering 
this vital social reform are known, and have been 
tested and applied in partial ways. What is needed is 
the large scale, adequately-funded, coordinated appli- 
cation of those methods. In a time when major new 
legislative advances are unlikely, the responsibility 
falls on existing governmental and private agencies, 
and on litigation and voluntary action as key areas for 
further progress. 

Public Housing and the Dual Housing Market 

To this point, the discussion has applied generally 
to the dual housing market, and to efforts to replace it 
with a single housing market. The remaining sections 
will address a special case within the dual housing 



" These cases, Wilkes v. South Suburban MLS, H-77-417, and 
U.S. V. South Suburban MLS. H-80-307, are pending trial in the 
U.S. Distnct Court in Hammond. Indiana. They allege that black 
real estate brokers were illegally excluded from a multiple listing 
service covering white areas of Lake and Porter Counties, Indiana. 



market, housing for low and moderate income per- 
sons, and one method of providing such housing, the 
public housing program. 

Public responsibility for housing for the poor is a 
relatively recent phenomenon in the United States, 
dating from the 1930's. Following on a few examples 
from private philanthropy, and beginning with hous- 
ing built by the Federal Public Works Administration, 
a succession of federal programs has been adopted and 
implemented to provide safe, sanitary and decent 
housing for people who could not afford to rent or buy 
such housing in the private market." Most of these 
have been programs to subsidize the construction and 
operation of new structures designed to house such 
persons. In more recent years, programs to rehabili- 
tate existing structures for such purposes and to 
provide a subsidy for such families in existing struc- 
tures have been added. 

This issue is important to a discussion of the dual 
housing market. First, blacks and minorities are over- 
represented in the income groups which cannot obtain 
adequate housing without assistance. Second, poor 
blacks and minority persons suffer double discrimina- 
tion on account of race and economic status. There is 
a general prejudice against the poor in this society and 
a particular prejudice against housing for the poor 
because of certain well-publicized failures in the public 
housing programs. 

Assisted Housing — The Present Situation 

The Chicago metropolitan area, by the latest study, 
provided a total of 1 10,453 units of assisted housing or 
about 4 percent of the total of 2,496,876 such housing 
units." In most of the assisted housing, the subsidy is 
attached to the particular structure and to the location 
in which it was built. In these forms of assisted 
housing, the critical factors for the dual housing 
market are the racial composition of the community in 
which the housing market is located, and the tenant 
marketing and selection policies of the management. 
11,396 units, 10 percent of the total, are subsidized 
under the Section 8 existing housing program in which 
the subsidy goes with the tenant to the housing of his 
choice among appropriately priced units in the juris- 
diction of the administering housing authority. Here 
the considerations are similar to those in the private 

" This discussion draws heavily on Devereux Bowly. The 
Poorhouse — Subsidized Housing in Chicago. 1895-1976, Southern 
Illinois University Press (1978). 
" This section uses figures from Elizabeth Warren, supra. 



44 



rental market although the subsidy adds an additional 
complication 

About one-third of the assisted housing units are for 
the elderly, the remainder for families. For dual 
housing market consideration, assisted housing for 
families is more relevant, since elderly households by 
preference are not as mobile as family households and 
thus elderly assisted housing would be expected to 
reflect the racial composition of the community in 
which it is built more fully than family assisted 
housing. 

In the 99,097 housing units in which the subsidy is 
attached to he unit, 44,952 are public housing units; of 
these 32,264 are for families, 12,688 for elderly. Of the 
32,264 family public housing units, 30,398 are in 
Chicago, 1,866 in the suburbs. The units in Chicago 
are concentrated heavily in 12 community areas, most 
of them predominantly black, and almost all of these 
units are occupied by blacks. The Gautreaux litigation 
established that this policy of building segregated 
housing in segregated neighborhoods had been deliber- 
ate on the part of the Chicago Housing Authority and 
that HUD had been culpable for its acquiescence in 
and support of this policy. The exceptions to this 
segregated practice are three mixed housing projects in 
which the racial occupancy is governed by court 
orders in Gautreaux and 153 units of scattered site 
housing in racially diverse community areas, much of 
it built under those orders. 

In the suburbs, family housing is concentrated in 
ten suburbs all with substantial black populations. I do 
not have available at this writing the precise racial 
compositions of those projects or of the immediate 
surrounding areas, but it is clear that most of these 
housing units, also, provide housing for blacks in 
segregated black areas. 

Thus public housing is, on the whole, the most 
segregated of all housing. The exception, and the hope 
for the future, is scattered site public housing. 

The other construction assistance programs. Section 
221 (d)(3). Section 235, Section 236, and Section 8 
new construction and substantial rehabilitation, have a 
somewhat better record. Many of these were provided 
in the 1970's, under federal fair housing laws, HUD 
site selection standards and affirmative marketing 
requirements, and, after 1974 Congressional mandates 
to avoid concentrations of assisted programs. Substan- 
tial proportions of this housing was built in the 
suburbs. For example, 8,427, or 29 percent of the 
region's total of 28,772 Section 221(d)(3) and Section 
236 were provided in the suburbs, and 1,801, or 32 



percent of the regions 5,623 Section 8 new construc- 
tion and substantial rehabilitation units were provided 
in the suburbs. In contrast, only 6 percent of the 
family public housing units are in the suburbs. 

This is significant because it provides some opportu- 
nity for low-income minority families to make a choice 
between city and suburban locations and, especially, to 
follow growing displacement of jobs from city to 
suburbs. While this record is better than that for 
public housing, it does not represent a complete break 
with dual housing market patterns. Much of the city 
housing in this category is located in predominantly 
black areas, and has mainly black occupants — again, 
segregated housing in segregated neighborhoods. 
Some of the suburban housing in this category is 
similar in location and residential make-up. 30 percent 
of the suburban 221 (d)(3)/236 production is in 
predominantly black communities, and in these areas 
most of the occupants are blacks. Section 8 new 
construction is less concentrated and has a more 
diverse population. Particularly the developments 
financed by the Illinois Housing Development Au- 
thority, which requires and monitors strong affirma- 
tive marketing, are well-located throughout the subur- 
ban area and have achieved proportions of black 
occupancy in developments in white areas which 
range from 10 percent to 30 percent. Many of these 
are also mixed-income developments, which adds to 
their viability and acceptability. 

There are now enough suburban and city develop- 
ments with good records for location, racial diversity 
and economic viability to provide examples of success- 
ful racially diverse housing with positive impact on the 
surrounding neighborhood. It is little short of tragic 
that just when these examples might provide the 
impetus for dramatic changes in total housing pat- 
terns, a combination of economic conditions and 
changed government policies appears likely to shut 
down such programs completely. 

The Section 8 existing housing program, in theory, 
offered an ideal mechanism for low-income minority 
families to find housing outside the black sector of the 
dual housing market. 

In fact, most Section 8 existing placements refiect 
the dual housing market. Consumer reluctance to 
shop for housing in unfamiliar areas, landlord reluc- 
tance to cooperate with the Section 8 program and 
outright racial discrimination have meant that most 
black Section 8 existing families live in black areas. 
There are some exceptions in Chicago, where Gau- 
treaux orders dictating the proportions to be made 



45 



available in black and white areas have been partially 
observed, and in a special program, administered by 
the Leadership Council to provide direct relief using a 
special set-aside of Section 8 existing units to members 
of the Gautreaux plaintiff class. 

The experience of these programs illustrates clearly 
the maxim: Any housing program which is not 
deliberately administered to overcome the dual hous- 
ing market will end up by reinforcing it. 

Remedies in Assisted Housing 

As we have seen, the massive concentrations of 
segregated public housing make this program a part of 
the problem of the dual housing market. 

Can public housing be part of the solution? The 
question is complicated by the fact that the original 
design and subsequent management of much of this 
public housing has been of poor quality, that it 
provides a distressing environment for the families 
who hve there and has given all public housing and, to 
some extent all assisted housing, a negative image 
which makes far more difficult efforts to build needed 
assisted housing of good design and quality. Added to 
this is the extremely high cost of maintaining such 
structures in a situation where they are heavily over- 
used. 

Under Gautreaux court orders and earlier, some 
scattered site public housing has been built in Chicago. 
Three to 15 units in size, not concentrated in one 
block or neighborhood, with designs which fit neigh- 
borhood patterns, careful selection of tenants and 
regular maintenance — these developments have been 
well accepted, even though they were often opposed 
initially by local residents. This experience establishes 
a hopeful pattern for the future. 

A rational policy would encourage the rapid growth 
of such small, scattered public housing developments, 
looking to the time when their availability would allow 
for some lowering of the density in the massive high- 
rise concentrations, and conversions of some of those 
to alternate uses and as elderly housing, or limited 
equity cooperatives. 

The city and CHA are, under Gautreaux court 
orders, embarked on a modest expansion of such 
housing aimed to provide 2,200 units in all parts of the 
city. Acquisition and construction have encountered 
familiar kinds of opposition from some neighbor- 
hoods, but have also generated support from tradition- 
al supporters of rational housing planning and from 
such new groups as a city-wide tenants association. 



Recent proposals by Chicago's mayor to stop this 
program and to shift the funds committed to it to 
operating subsidies for the bankrupt older develop- 
ments are short-sighted in the extreme and, in my 
view, are precisely the wrong allocation of priorities. 
Scattered site public housing is the only available form 
of public housing construction which can provide a 
good environment for families, particularly large 
families; it has the best chance of avoiding the fatally 
high maintenance costs of the high-rise concentra- 
tions. 

The Gautreaux Program operated by the Leader- 
ship Council presents another model. The Council 
seeks out landlords and persuades some of them to 
cooperate by renting to Section 8 certificate holders, 
and works closely with the applicant families to 
prepare them for the choice and move. This combina- 
tion of tenant and landlord approaches has resulted in 
1,250 moves in the last five years, most of them of very 
low-income black families to predominantly white 
suburbs, with little notoriety or opposition, good 
acceptance by landlords and tenants, and a rate of 
turnover which compares favorably with that in both 
subsidized and market rate rental developments. 

The program is a further demonstration that mixed- 
income, racially diverse housing can work for all 
involved. It stands in contrast to the experience of 
other Section 8 existing programs whose promise of 
mobility and reduced concentrations for assisted 
families has not been met. It offers a model of the 
extra services needed if the housing voucher program 
now proposed as a replacement for Section 8 is not to 
add one more to the list of well-intentioned housing 
programs which ended up reinforcing the dual hous- 
ing market. 

A further problem with Section 8 existing housing 
program is that they are administered by a housing 
authority within that authority's geographic jurisdic- 
tion. There are 13 such authorities operating Section 8 
programs in the Chicago metropolitan area, and their 
boundaries limit the choice of families who apply for 
their programs. 

Eight of the authorities, however, have chosen to 
cooperate in a certificate exchange program, coordi- 
nated by the Leadership Council, in which they make 
at least 5 percent of their Section 8 certificates 
available to families from cooperating jurisdictions. In 
the first two years, 284 families looked for housing in 
another area and 141 were successful. Such moves go 
in all directions, but a significant proportion of them 



46 



provided opportunity for minority families to move evidence that the mobility provided in these programs 

out of areas of minority concentration. is a key element for some such families in entering, or 

Here are three models of operation of assisted upgrading themselves, in the better job markets 

housing programs, one in public housing, which show provided by their new locations, 

that the dual housing market need not prevail, and As a matter of right, and as a matter of sound 

that well-conceived programs to offer low-income public policy, programs to deconcentrate assisted 

minority families a wider choice in the housing market housing and to offer low-income families a choice of 

are eagerly sought by the eligible families and well- location should have high priority, 
accepted in the receiving communities. There is some 



47 



The Developers 



The Establishment of Housing Patterns in 
Chicago 

by Michael W. Scott, Vice President, Pyramidwest 
Development Corp. 

Chicago is perhaps the most residentially segregated 
city in the country. Its reputation is based on a strong 
tradition of neighborhood towns or "ethnic states." 
Early Chicagoans — Bohemians, Germans, Irish, Ital- 
ians, Jews, Lithuanians, Poles — tended to settle to- 
gether and defend their customs and their borders 
against newcomers. Black people were the ultimate 
newcomers. Lured up from the South by stories of 
higher wages, political freedom, the "good life," they 
settled on the South Side and began testing borders. 

By the end of World War I their own borders had 
been erected for them. Jim Crow ordinances and 
restrictive covenants were used to control any expan- 
sion. Specifically, the Chicago Real Estate Board's 
Code of Ethics cautioned: "A realtor should never be 
instrumental in introducing into a neighbor- 
hood. . .members of any race or nationality or any 
individual whose presence would be clearly detrimen- 
tal to property values in that neighborhood." But the 
black influx continued, and by the 1940's the South 
Side could no longer accommodate the migrants. 
Subscribers to the American Dream, they wanted the 
stability symbolized by home ownership. Some blacks 
jumped the borders and spilled over into wherever 
housing was available; East Chicago, Chicago Heights. 
Some went as far as Gary, Indiana, and sat waiting for 
change to move back. At the same time, many whites 
were moving into the suburbs. 



In 1948 the United States Supreme Court ruled 
racially restrictive convenants judicially unenforcea- 
ble. In 1950 the Real Estate Board dropped the words 
"race" and "nationality" from its code, but the policy 
remained the same. In the mid-1950's when urban 
renewal began its demolition and removal program in 
black slum areas, a number of "panic peddlers" seized 
on the U.S. Supreme Court's 1948 ruling to "open up" 
and "turn" white residential neighborhoods over to 
eager black buyers. For most poor black families 
uprooted by urban renewal, as well as for those 
seeking to get out of other overcrowded black commu- 
nities, the choice was a simple one: accept segregated 
public housing, challenge segregationist practices in 
white ethnic neighborhoods and depend on police 
protection, or attempt to buy one of the solidly 
constructed homes rapidly becoming available 
through a combination of panic peddling and the 
exodus of white ethnics to the suburbs. Many poor 
black families, like those in Lawndale, chose to follow 
the blockbusters. 

Lawndale 

The North Lawndale community is a tract of land 
located about 6 miles due west of Chicago's central 
business district. It consists of approximately 5 square 
miles of land and is inhabited by approximately 90,000 
persons, 99 percent of which are minority (black). The 
area is generally identified as that land located 
between the Eisenhower Expressway on the North, 
the city limits on the West, Western Avenue on the 
East and 22nd Street on the South. 



48 



Between 1958 and 1961, most of the northern part 
of Lawndale passed from white to black occupancy, 
with little enough push from the blockbusters. Some 
merely hired black women to walk their children 
through white neighborhoods or paid black men to 
drive noisy cars through an area a few times a day. 
Sometimes it was a telephone call for "Johnnie Mae." 
Another caller might simply say, "They're coming." 
The whites sold, many at prices far below the appaised 
value of their homes. And very shortly, sometimes 
within the same week, the houses would be resold to 
eager black families at inflated prices and at very high 
interest rates on installment purchase contracts. 

By all indices of standard social science and 
conventional wisdom. North Lawndale should not 
survive as a community, let alone grow in strength. 
Disaster might best describe the almost three-mile 
stretch of Roosevelt Road, the major commerical strip 
that goes through the community. The property has 
suffered the ravages of the marketplace: declining 
purchasing power as black families, many of whom 
were employed in marginal jobs or received public 
assistance, moved in, and now many are moving out; 
competition to the west and south from small-and- 
medium-sized shopping centers with their two square 
foot of shopping. Many other commercial streets in 
Chicago have suffered a similar fate, but what 
distinctively marks off Roosevelt Road, and one or 
two other streets on the westside, is yet another 
factor — the destruction wrought by the rebellious act 
of young blacks in the riots of the late sixties. 
Frustrated by a system that was rigged against them 
and unable to obtain redress through legitimate 
channels, many of the young people of Lawndale 
literally took up the torch as a political weapon. Fury 
mixed with protest left many burned out buildings 
along Roosevelt Road after the rebellion of the 
summer of 1966 and the one that followed the 
assassinatio) of Martin Luther King Jr. two years 
later. 

This protest did receive a response from federal and 
local governments. With great ballyhoo large-scale 
funding was suddenly heaped upon emergency pro- 
grams for housing, jobs and social services. Some 
youth gang leaders were sent to Dartmouth College, 
others to Stateville Penitentiary. In the midseventies. 
North Lawndale no longer showed raw scars like 
those of a city just after an air raid. The burned out 
buildings have been bulldozed and weeds were grow- 
ing in their place. The emergency programs had 
disappeared too. 



90,000 black people still remained in North Lawn- 
dale. Undaunted by the experts' projections of date, 
they still confronted the struggle to forge a viable 
social community and to make the physical surround- 
ings decent ones to live in. 

Other Factors 

The West Side historically was an area where early 
Chicago industrialists located heavy industry in order 
to take advantage of the river and the railroad 
network which made possible the transportation of 
raw materials and goods. "Monster factories" were 
built. Working-men built cottages nearby. Despite 
poverty, disease and industrial strife, refugees and 
immigrants from other lands chose the city, and the 
West Side was where they first settled in Chicago. 

A Post World War II survey of Chicago's industrial 
plants found one-third of all Chicago factories were 
constructed before 1912, were multi-story buildings, 
48 percent of which had no room for expansion. 
Industrial parks in uncorporated areas was the solu- 
tion industrialists chose, rather than build a new plant 
on the same ground. A new logic for economic 
location was fashioned around the building of super 
highways, decentrialization of operations, horizontal 
line production methods and the high cost of city sites. 
West Side industrial operations, some already 70 years 
old in 1940, found land outside the city limits for their 
innovations rather than sink millions into renovation. 
Industrial slums without jobs were what was left of 
what was once the heart of Chicago's economic life. 

The West Side's role in the city's overall economic 
planning changed from industrial to institutional, 
from blue collar to white collar. Speculators, large and 
small, rediscovered a new frontier — the West Side. 

The civil rights movement of the 1960's contented 
that the national urban renewal efforts were no more 
than Negro removal. In Chicago, the blacks who had 
already been relocated from the South Side by 
institutional clearance resisted and began to counter- 
attack. Organizations, made up of blacks who had 
almost over-night filled the West Side homes and 
apartments vacated by whites, were founded. Local 
organizations, protesting unlivable conditions and 
rejecting any vision of a new economic frontier on the 
West Side that excluded them, struggled for a voice 
and a choice in their future. 

Organizing West Side Style 

West Side organizations banded together at first 
under the banner of Dr. Martin Luther King's Illinois 



49 



Rally for Civil Rights (1964) in order to visibly 
demonstrate the size and strength of their community 
in a town that refused to admit that blacks were a 
plurality on two sides of town — South and West. The 
West Side Federation (WSF) bom in 1965 under the 
leadership of a local black Baptist minister, began to 
review the needs of its communities, Lawndale, East 
Garfield Park, West Garfield Park and Near West 
Side. WSF viewed itself as providing a forum and 
service for local organizations. Membership groups 
represented both the people of the community and 
local service organizations. WSF activities at first 
covered a range of different issues and experimental 
programs; some carefully planned and executed while 
others were almost instinctive response to the crises of 
the moment. 

In December 1966, the WSF discovered private 
developers had completed first phase planning (dia- 
grammatic area plan, preliminary consideration of 
structure types, and economic feasibility) covering the 
entire Lawndale community. Meetings between devel- 
opers representing Chicago's largest commercial con- 
cerns and the Department of Urban Renewal were 
held in order to find a suitable framework for the 
proposal. Trips to Washington, D.C., to discuss Model 
Cities and "New Town" legislation were held. Specif- 
ics of the plan included total clearance of several 
square miles of housing to be replaced by 12,500 units 
of middle and upper income housing owned and leased 
by the developer, a 45 acre golf course, etc. . . The 
WSF countered with a plan of its own. 

An ad hoc group of Lawndale organizations, called 
Lawndale Peoples Planning and Action Conference 
(PPAC), aided by WSF, after six months of intensive 
review of public and private plans for its community, 
sponsored a conference entitled "Today's Lawndale: 
Black Colony — Tomorrow's Lawndale: New City." 
The results of this conference convinced community 
representatives that their community could prosper 
only by hiring their own planners to work with and 
represent the community. Subsequently, the sponsor- 
ing organizations provided the leadership in fund 
raising from local business for the creation of the 
Lawndale People's Planning Committee (LPPC). The 
Committee was to oversee anticipated community 
improvement efforts and to build wider community 
support for these efforts. 

In March 1968, the consulting firms of Greenleigh 
Associates, Inc. (social research and management 
consultants) and Marcou, O'Leary and Associates 
(planning and urban development consultants) were 



engaged to provide professional assistance to LPPC in 
preparing a social and physical development plan and 
action program for a prototype area. 

Early in their study, the consultants made two 
recommendations which were considered critical to 
any sustained community improvement effort. One 
was to develop a strong, broadly representative com- 
munity organization able to gain community-wide 
consensus on long-range objectives and short-range 
actions and able to press dramatically for increased 
city government attention and aid. The other was to 
form an economic development corporation owned by 
a broad range of Lawndale residents and capable of 
undertaking large-scale development projects. Both 
recommendations were instituted. 

In November 1968, four major Lawndale organiza- 
tions, including LPPC, merged into the Lawndale 
Peoples Planning and Action Conference (LPPAC). 
North Lawndale Economic Development Corporation 
(presently known as Pyramidwest Development Cor- 
poration PDC) was created as a profit making, 
community owned structure capable of undertaking 
large housing, commercial and industrial ventures to 
aid the overall community and permit profits to be 
distributed to individual shareholders throughout the 
community. 

The development strategy chosen was the "proto- 
type approach" which made it possible to immediately 
begin to solve current problems in a selected geo- 
graphic area and at the same time prepare sufficiently 
broad plans in scope to capture the imagination and 
support of the entire community as well as public and 
private leaders in the city. Plans for the prototype 
areas would demonstrate solutions to pressing prob- 
lems existing throughout the area. 

Pyramidwest: Its Board and Structure 

Armed with this community mandate, Pyramidwest 
became a for-profit corporation under the laws of the 
state of Delaware (authorized to operate in the state of 
Illinois); its 23 original incorporations, many of whom 
are still actively involved in the corporation, were 
residents of or employed in North Lawndale. Pyram- 
idwest now has three classes of stock: Class A, the 
50,000 authorized voting common shares, is registered 
under the Securities Exchange Act of 1934 and is 
intended to be sold to the residents of the area at $5.00 
per share. At present there are 578 stockholders 
holding 1,954 shares. In Class B, 192,000 of an 
authorized 200,000 nonvoting shares are held by an 
Illinois trust for the benefit of LPPAC and its 



SO 



constitutents and have been issued in exchange for the 
capital contributions of the U.S. Office of Economic 
Opportunity and its successor, the Community Ser- 
vices Administration. Most of the profits generated by 
Pyramidwest will go into this trust and are to be 
distributed in the community for health, education, 
social and other activities for the benefit of the low- 
income residents. There is also a Class C nonvoting 
stock, for private offerings to large institutional 
investors to attract additional venture capital. 

The company at this time has a 21 -member board of 
directors elected by the Class A stockholders for 
three-year staggered terms. The Pyramidwest Devel- 
opment Corporation also has a very active business 
advisory group, currently made up of eight downtown 
business and banking executives, lawyers, and ac- 
countants, which advises the corporation on technical 
matters and on day-to-day business strategies. 

Investments 

In 1974, Pyramidwest organized Pyramidwest Real- 
ty and Management, Inc., (PRM) as a wholly-owned 
subsidiary corporation to develop, moderate and 
manage residential, commercial and industrial proper- 
ties. PRM is a licensed real estate brokerage company 
whose business consists of property management and 
the arranging of financing for the development and 
sale of rehabilitated and new residential, commercial 
and industrial properties. PRM is also engaged, on a 
limited basis, in the real estate brokerage business on 
the West Side of Chicago. 

Local Redevelopment Authority of Lawndale, Inc. 
(LRAL) is a not for profit Illinois corporation which 
was incorporated in 1971 to receive and administer 
public works grants from the Economic Development 
Administration (EDA) of the United States Depart- 
ment of Commerce and to accept and administer 
programs and funds from other government agencies 
and private sources as might further the development 
activities of PRM. LRAL is not a subsidiary of 
Pyramidwest but the President of Pyramidwest is the 
Secretary and one of 1 1 directors of LRAL. 

Certain commercial and industrial developments 
and healthcare developments being developed by 
PRM California Health Care, Inc. (CHI) were the 
beneficiaries of LRAL administered EDA public 
works grants for site improvements. In order for these 
developments to qualify for EDA public works grants 
for certain site improvements, land originally acquired 
by Pyramidwest was sold to LRAL and leased back to 
Pyramidwest and LRAL later assigned all of their 



resp)ective interests in such land to certain Illinois land 
trusts which are beneficially owned by Illinois limited 
partnerships in which Pyramidwest has invested as a 
limited partner' PRM or CHI is the general partner in 
all of these llinois limited partnerships. 

Property Management 

PRM has been engaged in property management 
activities for more than seven years. Presently, PRM is 
managing approximately 1,500 units of substantially 
occupied residential properties. PRM has also man- 
aged up to 50,000 square feet of occupied commercial 
properties and currently manages approximately 
10,000 square feet of occupied commercial properties. 
The property management and real estate develop- 
ment activities of PRM contributed $926,670 or 29 
percent of the consolidated revenues of Pyramidwest 
for the six months ended December 31, 1980. PRM 
operated properties which generate more than 
$1,000,000 in revenues. PRM administered these 
funds as agent by paying all costs of operations and 
overseeing the activities of more than 60 employees of 
the properties. These activities were accounted for by 
periodic reports to the owners of the properties. 

Industrial Development 

Cal-West Center I Investors 

Cal-West Center I Investors, an Illinois limited 
partnership, in which Pyramidwest owns a 99 percent 
limited partnership interest and in which PRM is the 
general partner and owns a one percent partnership 
interest, owns the beneficial interest in an Illinois land 
trust which holds legal title to the eight subdivided 
lots of Cal-West Center industrial development. To 
accomplish site developments, the land was sold to 
LRAL so that the site could qualify for 80% EDA 
public works site improvement funds for the construc- 
tion of streets, sewer and water and utility lines. After 
site improvements were completed, the completed 
improvements were dedicated to the city of Chicago 
for operation and maintenance. LRAL's interest in the 
lots was then deeded to the Illinois marketing efforts 
which were terminated when the Chicago Board of 
Education, a public agency with condemnation pow- 
ers, passed a resolution calling for the acquisition of 
the entire site for the construction of a new public high 
school. In July 1979, the Public Building Commission 
of Chicago filed condemnation proceedings to take 
this property for that public purpose. In such a 
proceeding the owner is entitled to fair market value 
compensation as determined by the Circuit Court of 



51 



Cook County, Illinois. Fair market value compensa- 
tion as determined by the Court may not equal the 
cost of acquistion and carrying charges as carried on 
the books of Cal-West Center I Investors. The 
condemnation proceedings may be abandoned, and, if 
abandoned, PRM will place the site on the market 
again. No assurances can be given that this develop- 
ment can be marketed, and, if marketed, that it can be 
financed and developed. 
Cal-West Center II Investors 

This development (Chicago Center for Industry) 
consists of 53 acres which are now being marketed. 
LRAL completed construction of demolition, street, 
sewer and water and utility improvements on the 
parcel in late summer, 1979, and these improvements 
have been dedicated to the city of Chicago. The 
remaining acreage has been subdivided into 17 parcels 
and transferred to an Illinois land trust, which is 
benefically owned by Cal-West Center II Investors, an 
Illinois limited partnership in which Pyramidwest 
owns a 99 percent partnership interest. PRM, the 
general partner and owner of a one percent partner- 
ship interest will sell or lease the subdivided lots 
and/or develop and lease facilities to businesses which 
are expected to provide employment opportunities for 
area residents. This development is one of several 
industrial developments now on the market in the city 
of Chicago. These developments compete against each 
other and against suburban industrial developments. 
To the extent that taxes, environment and similar 
considerations are competitive factors, this develop- 
ment may be at a competitive disadvantage with such 
other industrial developments. No assurances can be 
given that this development can be marketed, and, if 
marketed, that it can be financed and developed. 

Commercial Development 

Lawndale Plaza Investors 

Lawndale Plaza Investors, an Illinois limited part- 
nership, is beneficial owner of an Illinois land trust 
which will own the proposed Lawndale Plaza Shop- 
ping Center. Pyramidwest owns a 99 percent limited 
partnership interest and PRM is the general partner 
and owns a one percent partnership interest. A portion 
of the land has been transferred to LRAL and leased 
back to the Illinois land trust for site development, 
including the construction of a parking area, sewer, 
water and utility lines and landscaping improvements. 
Financing for the site development costs is to be 
provided by LRAL, if the EDA funding allocated for 
this activity remains available. 



Lawndale Plaza is a proposed commercial develop- 
ment which will serve a low income area and, as such, 
will compete with the central business district and 
surrounding suburban and neighborhood development 
for tenants and customers without the benefit of ideal 
location or the advantages of price or tenant mix. No 
assurances can be given that acceptable tenants can be 
found or that financing can be arranged for develop- 
ment of these facilites, or that this development can be 
completed or, if completed, that it will generate 
sufficient income to service the mortgage debt and pay 
expenses of operations. 
Lawndale Towers Investors 

Lawndale Towers is a proposed commercial devel- 
opment of 20,000 square feet. This space will be 
developed by Lawndale Towers Investors, an Illinois 
limited partnership, beneficial owner of an Illinois 
land trust which holds title to the northwest corner of 
the Lawndale Plaza Shopping Center site, a lot of 
37,308 square feet. PRM is the general partner and 
owner of a one percent partnership interest and 
Pyramidwest owns a 99 percent limited partnership 
interest. The structure is planned as two levels of 
approximately 20,000 net leasable square feet. 

No assurances can be given that PRM can raise the 
capital investment required or that, if raised, such 
capital investment can be leveraged to generate the 
required mortgage financing. Even if financing can be 
secured, no assurances can be given that this develop- 
ment can be constructed within the estimated budget, 
or that, if developed within its budget, the facility can 
be operated on a basis that generates sufficient income 
to pay operating expenses and service the mortgage 
debt. 
CHP Associates I Ltd. 

The 3.65 acre Lot 1 of California Health Park has 
been conveyed to an Uinois land trust for the sole 
benefit of CHP Associates I Ltd', an Illinois limited 
partnership. PRM is the general partner and owns a 
50 percent limited partnership interest and Pyramid- 
west is a limited partner and owns a 50 percent limited 
partnership interest. 

PRM proposes to develop this site as a convenience 
shopping center consisting of approximately 30,000 
square feet of retail space to be leased to grocer, 
restaurant and service tenants. This development 
would require special zoning approval and will only be 
pursued if such approval can be obtained and if 
acceptable tenants can be recruited to locate on the 
site. The Board of Commissioners of Cook County has 
instituted proceedings to condemn this site for a public 



52 



purpose and the Circuit Court of Cook County will 
determine the fair market compensation due to PRM 
for the taking of this property. 

No assurances can be given that these contemplated 
proceedings will be complete, and if not that the 
property can be financed, developed or operated on a 
basis that will produce income sufficient to cover 
operating expenses, service the mortgage debt or 
produce a profit. 

Residential Development 

Lawndale Terrace Investors 

Lawndale Terrace Investors, an Illinois limited 
partnership, was organized to develop and own a 150 
unit rental housing development consisting of a 120 
unit elderly building and 30 units of attached town- 
house family dwellings. The partnership is beneficial 
owner of property held by an Illinois land trust. PRM 
is a general partner of the partnership. Pyramidwest 
sold its limited partnership interest to private inves- 
tors. Construction is expected to be completed in 
November, 1981 under financing insured by HUD and 
a commitment of Government National Mortgage 
Association (GNMA) permanent mortgage funds 
under a 40 year mortgage with interests at 7.5 per 
annum. Interim financing for the construction of the 
development is being provided by the Illinois Housing 
Development Authority (IDHA) for a period of 20 
months at an interest rate of 1 1 percent annum. 

Under the terms of the sale of limited partnership 
interest to private investors, for a fee, PRM has 
undertaken to guarantee funds, in addition to loan 
proceeds, required to complete the development and 
to close the permanent loan. PRM has incurred no 
material obligations under this provision to date and 
does not anticipate any such obligations in the future. 
PRM will manage the property for the partnership for 
the fee plus costs of operations. In addition, if the 
permanent mortgage is not closed prior to expiration 
of GNMA commitment expires and is not timely 
reinstated, or if PRM does not supply any funds 
required to complete the development, then the 
limited partners have the right to receive a refund of 
their capital contributions. 

The development will compete with other elderly 
and family developments located in surrounding areas 
and may experience difficulties in attaining desired 
occupancy levels. No assurance can be given that this 
development can be completed with available financ- 
ing, that the permanent loan can be closed before the 



commitment expires, or that PRM can raise any funds 
required to complete the financing. 
Plaza Courts Associates (Douglas Park 

Development-NLEDC Group Investors) 

Plaza Court Associates (formerly Douglas Park 
Development-NLEDC Group Investors) is an Illinois 
limited partnership organized to develop and own the 
beneficial interest in an Illinois land trust which will 
own the Plaza Court development. PRM is a general 
partner and Pyramidwest has sold its limited partner- 
ship interest. HUD is providing insurance of construc- 
tion financing and a permanent mortgage loan to 
develop this 48 unit development, consisting of 12 two 
bedroom units and 36 three bedroom units. A perma- 
nent mortgage commitment has been purchased from 
this development from GNMA. This development has 
received Section 8 housing assistance payments annual 
contribution reservations from HUD for each of the 
48 units. Construction started in December, 1980 and 
will be completed in twelve months. Under the terms 
of the sale of limited partnership interest PRM has 
undertaken, for a fee, to guarantee completion of the 
project. PRM has incurred no material obligations 
under this provision to date and does not anticipate 
any such obligations in the future. PRM will manage 
the property for the partnership for a fee plus the costs 
of operations. The site is located on the south side of 
Roosevelt Road directly across from the Lawndale 
Plaza Shopping Center site. 

This development will compete with other similar 
developments offering comparable facilities and ser- 
vices with similar terms and conditions. No assurances 
can be given that this development can be completed 
with available financing or that PRM can raise any 
capital required to complete the financing, or that the 
permanent loan can be closed before the commitment 
expires. 
Restoration Investors III 

PRM is a general partner in Restoration Investors 
III, an Illinois limited partnership, which is the 
beneficial owner of 51 existing buildings containing 
311 units. PRM manages all of the 311 units. PRM 
and Pyramidwest sold their limited partnership inter- 
ests to private investors. Each of the 3 1 1 units will 
qualify to receive HUD Section 8 housing assistance 
payments when each of the units is completed and 
certified for occupancy. 

PRM expects that construction on this development 
will be completed by March 1, 1982. During construc- 
tion PRM is required, for a fee, to advance any 
construction period operating deficits and will keep 



53 



any construction period operating surpluses. PRM 
receives a management fee from rentals and conces- 
sionaires. 

Under the terms of the sale of limited partnership 
interest to private investors, PRM has, for a fee, 
undertaken to guarantee funds in addition to loan 
proceeds required to complete the development to 
close the permanent loan. PRM has incurred no 
material obligations under this provision to date and 
does not anticipate any such obligations in the future. 
In addition, if the permanent mortgage is not closed 
prior to expiration of the GNMA commitment or any 
extension thereof, or, if any financing, insurance or 
subsidiary commitment expires and is not timely 
reinstated, or if PRM dies not supply any funds 
required to complete the development, then the 
limited partners have the right to receive a refund of 
their capital contributions from the partnership. 

No assurance can be given that the rehabilitation 
will be completed, and, if completed, that available 
financing will be adequate or that the work will be 
completed before the financing commitments expire. 
In addition, no assurances can be given that PRM can 
raise any capital required to complete the financing. 
Restoration Investors V 

PRM is a general partner in Restoration Investors 
V, an Illinois limited partnership, which is the 
beneficial owner of 11 existing buildings containing 
307 units. PRM presently manages all of the 307 units. 
Each of the 307 units qualify to receive HUD Section 
8 housing assistance payments when each of the units 
is complete and certified for occupancy by HUD. 

PRM and Pyramidwest sold their limited partner- 
ship interests and PRM remains as a General Partner 
of the limited partnership. As a General Partner PRM 
retains obligations to guarantee completion and 
against defaults in financing before delivery of the 
permanent loan and incurred other responsibilities 
similar to those undertaken in the sale of Restoration 
Investors III. 

Construction is substantially completed and the 
construction loan is being prepared for closing of the 
permanent loan. During construction PRM has been 
required, for a fee, to advance any construction period 
operation deficits and will keep any construction 
period operation surpluses. PRM has incurred no 
material obligations under this provision to date and 
does not anticipate any obligations in the future. PRM 
receives a management fee from rentals and conces- 
sionaires. 



No assurance can be given that the construction will 
be completed, and if completed, that available financ- 
ing will be adequate, or that the work will be 
completed before the financing commitments expire. 
In addition, no assurances can be given that PRM can 
raise any capital required to complete the financing. 
Restoration Investors I 

PRM is a general partner and owns a 99 percent 
limited partnership interest in Restoration Investors I, 
an Illinois limited partnership, which is benficial 
owner of 1 1 existing buildings containing 249 units. 
PRM presently manages all of the units. Legal title is 
held by an Illinois land trust which is mortgagor for 
HUD insured advances for development costs all of 
which will be provided by GNMA, the permanent 
lender upon completion of the project. The permanent 
mortgage loan will be for 40 years and the interest rate 
will be 7 and a half percent per annum. Each of the 
249 units qualify to receive Section 8 housing assis- 
tance payments, when each of the units is completed 
and certified for occupancy by HUD. 

PRM expects that construction will start on this 
development in December 1981 and be completed in 
18 months. During construction PRM will, for a fee, 
be required to advance any construction period 
operation surpluses. PRM will receive a management 
fee from rentals and concessionaires. 

PRM has an agreement to sell all of the limited 
partnership interest to private investors. PRM will 
remain as a General Partner of the limited partner- 
ship. As a General Partner PRM will, for a fee, be 
obligated to guarantee completion and against defaults 
in financing and incur other responsibilities similar to 
those undertaken in the sale of the interest in 
Restoration Investors III. 

No assurances can be given that financing will be 
adequate to complete the work, or that the work will 
be completed before the financing commitments ex- 
pire. In addition, no assurances can be given that 
PRM can raise any capital required to complete the 
financing. 
Restoration Investors II 

PRM is a general partner of Restoration Investors 
II, an Illinois limited partnership which is the benefi- 
cial owner of 6 existing buildings containing 1 1 1 units. 
PRM presently manages all of the units. Legal title to 
the buildings is held by an Illinois land trust which is 
mortgagor for HUD insured advances for develop- 
ment costs which will be provided by GNMA, the 
permanent lender, upon completion of the project. 
The permanent mortgage loan will be for 40 years and 



54 



the interest rate will be 7 and a half percent per 
annum. Each of the 111 units qualify to receive 
Section 8 housing assistance payments when each of 
the units is completed and certified for occupancy. 

Construction started on this development in De- 
cember 1980 and is expected to be completed in 14 
months. During construction PRM is required, for a 
fee, to advance any construction period operating 
deficits and will keep any construction period opera- 
tion surpluses. PRM has incurred no material obliga- 
tions under this provision to date and does not 
anticipate any such obligations in the future. PRM 
will receive a management fee of a percentage of gross 
collections from rentals and concessionaires. 

PRM sold all of the limited partnership interest to 
private investors. PRM will remain as a General 
Partner of the limited partnership. As a General 
Partner PRM will be obligated, for a fee, to guarantee 
completion and against defaults in financing and incur 
other responsibilities similar to those undertaken in 
the sale of the interest in Restoration Investors III. 
No assurances can be given that financing will be 
adequate to complete the work, or that the work will 
be completed before the financing commitments ex- 
pire. In addition, no assurances can be given that 
PRM can raise any capital required to complete the 
financing. 
Restoration Investors IV 

PRM is a general partner in Restoration Investors 
IV, an Illinois limited partnership which is beneficial 
owner of 21 existing buildings containing 266 units. 
PRM presently manages all of the units. Legal title to 
the buildings was purchased by an Illinois land trust 
which is mortgagor for HUD insured advances for 
development costs to be provided by GNMA, the 
permanent lender, upon completion of the project. 
The permanent mortgage loan will be for 40 years and 
the interest rate will be 7 and a half percent per 
annum. Each of the 266 units qualify to receive 
Section 8 housing assistance payments. HUD payment 
of Section 8 housing assistance payments will not 
begin for a unit until rehabilitation work has been 
completed on that unit and the unit certified for 
occupancy by HUD. 

Construction started on this development in Sep- 
tember 1981 and is expected to be completed in 15 
months. During construction PRM will, for a fee, be 
required to advance any construction period operating 
deficits and will keep any construction period operat- 
ing surpluses. PRM has incurred no material obliga- 
tions under this provision to date and does not 



anticipate any such obligations in the future. PRM 
will receive a management fee from rentals and 
concessionaires. 

PRM sold all of its limited partnership interest to 
private investors. PRM will remain as a General 
Partner of the limited partnership. As a General 
Partner PRM will be obligated for a fee, to guarantee 
completion and against defaults in financing before 
delivery of the permanent loan and incur other 
responsibilities similar to those undertaken in the sale 
of the interest in Restoration Investors III. 

No assurance can be given that financing will be 
adequate to complete the work, or that the work will 
be completed before the financing commitments ex- 
pire. In addition, no assurance can be given that PRM 
can raise any capital required to complete the financ- 
ing. 
Restoration Investors VI 

PRM is General Partner and owns a 99 percent 
limited partnership interest in Restoration Investors 
VI, an Illinois limited partnership which will be 
beneficial owner of 7 existing buildings containing 57 
units. PRM presently manages all of the units. Legal 
title to the buildings will be purchased by an Illinois 
land trust which will be mortgagor under a HUD 
insured mortgage. 

PRM has applied for HUD insured mortgage 
financing for rehabilitation of each of the 57 units and 
each unit will qualify for Section 8 housing assistance 
payments. HUD payment of Section 8 housing assis- 
tance payments will not begin for a unit until 
rehabilitation work has been completed on that unit 
and that unit has been certified for occupancy. 

PRM expects to sell its limited partnership interest. 
PRM expects that constructin will start on this 
development in March 1982 and be completed in 14 
months. During construction PRM will be required to 
advance any ceonstruction period operating deficits 
and will keep any construction period surpluses. PRM 
will receive a management fee from rentals and 
concessionaires. 

Prior to the time that work on all of the units is 
completed and such units are placed in service, PRM 
may sell all of its limited partnership interest to 
investors. If the limited partnership interest is not sold 
then PRM will be required to maintain its investment 
and rely upon the distribution of qualified operating 
surpluses or refinancing of partnership assets to 
generate income or return of capital from this develop- 
ment. 



55 



No assurances can be given that the acquisition will 
be completed, and, if completed, that available financ- 
ing will be adequate to complete the work, or that the 
work will be completed before the financing commit- 
ments expire. In addition, no assurances can be given 
that PRM can raise the capital required to complete 
the financing. 
Roosevelt-Independence Associates II. 

PRM is general partner and owns a 99 percent 
limited partnership interest in Roosevelt-Indepen- 
dence Associates II, an Illinois limited partnership, 
which will be beneficial owner of an Illinois land trust 
as mortgagor for a proposed HUD insured mortgage 
to acquire and rehabilitate 95 units of existing hous- 
ing. HUD has agreed to allocate 100 percent Section 8 
substantial rehabilitation housing assistance payments 
to this development and is processing an application 
for HUD mortgage insurance. Each of the units will 
qualify for Section 8 housing assistance payments. 
HUD payment of Section 8 housing assistance pay- 
ments will not begin for a unit until rehabilitation 
work has been completed on that unit and that unit 
has been certified for occupancy by HUD. 

PRM expects that construction will start on this 
development in June 1982 and will be completed in 18 
months. During construction PRM will be required to 
advance any construction period operating deficits and 
will keep any construction period surpluses. PRM will 
receive a management fee from rentals and concession- 
aires. 

Prior to the time that work on all of the units is 
completed and such units are placed in service PRM 
expects to sell all of its limited partnership interest to 
private investors. If the limited partnership interest is 
not sold PRM will be required to maintain its 
investment and rely upon the distribution of qualified 
operating surpluses or refinancing of partnership 
assets to generate income or return of capital from this 
development. 

No assurances can be given that the acquisition will 
be adequate to complete the work, or that the work 
will be completed before the financing commitments 
expire. In addition, no assurances can be given that 
PRM can raise the capital required to complete the 
financing. 
CHP Associates II Ltd. 

PRM is a general partner and owns a 49 percent 
limited partnership interest and Pyramidwest is a 
limited partner and owns 50 percent limited partner- 
ship mterest in CHP Associates II, Ltd., an Illinois 
limited partnership. CHP Associates II, Ltd., is sole 



beneficiary of an Illinois land trust which holds legal 
title to Lot 2 of California Health Park consisting of 
approximately 3.80 acres. 

PRM had proposed to develop approximately 200 
units of elderly and handicapped housing on this site. 
However, because of the condemnation proceedings of 
the Board of Governors on Lot 1, the commercial 
development that had been planned for Lot 1 will now 
be pursued on Lot 2 and the residential development 
planned for Lot 2 will be abandoned. Special zoning 
approval will be required to pursue this development. 

No assurances can be given that government ap- 
provals can be obtained, or that acceptable financing 
can be arranged, or that PRM can raise the necessary 
equity capital required to complete the financing. 
Further, no assurances can be given that, if financed 
and developed, the development can be operated on a 
basis that will produce sufficient income to cover 
operating expenses, service the mortgage debt or 
produce a profit. 

Health Care Developments 

California Healthcare, Inc. 

California Healthcare, Inc. (CHI), a wholly owned 
subsidiary of Pyramidwest, was organized in 1975 to 
develop and operate health care facilities on the 23 
acre site designated as California Health Park. CHI is 
in the business of developing and operating health care 
facilities in which Pyramidwest has made investments 
and expects to expand its activities to the development 
and operation of health care facilities owned primarily 
by others, for a fee, or, for a fee plus an equity interest. 
CHI employs 2 persons on its staff. One facility has 
been developed and is in operation. A second and 
third facility are being planned and permits and 
financing will be sought. 
California Gardens Investors 

CHI organized California Gardens Investors in 
1975 to own and operate a 302 bed skilled nursing care 
facility as the first phase of development of California 
Health Park. CHI is the general partner and owns a 1 
percent partnership interest and Pyramidwest is a 
limited partner and owns a remaining 99 percent 
limited partnership interest. 

An agreement was entered into with Morton J. 
Gelberd who is the Administrator of California 
Gardens. The agreement provided for the transfer of a 
portion of Pyramidwest's limited partnership interest 
to an escrow account for the benefit of Mr. Gelberd 
and Pyramidwest. In exchange for this transfer, Mr. 
Gelberd has executed and delivered a promissory note 



56 



in the principal amount of $126,497 due April 1, 1981 
and bearing interest at an annual rate of 6 percent. 
Certain profit based performance incentive provisions 
of the agreement, which would have resulted in a 
partial or a total forgiveness of the note, were not met 
and Mr. Gelberd has elected not to pay the note, the 
limited partnership interest has been returned to 
Pyramidwest. On June 30, 1981 CHI entered into an 
agreement to sell California Gardens to private 
investors. 

California Gardens Investors generated $1,351,879 
or 42 percent of the consolidated revenues of Pyramid- 
west for the six months ended December 3, 1980 and 
suffered accrual basis losses of $234,100. California 
Gardens derived approximately 95 percent of its 
revenues under the State of Illinois Medicaid program 
during the six months ending December 31, 1980. 
Reimbursements under this program are based on 
costs, as defined, of rendering service to program 
beneficiaries. The determination of costs requires 
interpretation of the applicable laws and regulations 
and the application of complex accounting techniques. 
Such determinations are subject to review and adjust- 
ment by the federal and state reimbursement program 
administrators. 

No assurance can be given that California Gardens 
will be able to sustain its operations under the 
restrictions and time delays imposed by government 
regulators and reimbursement sources, or, that, if the 
facility does sustain operations, that such operations 
will continue to comply with standard government 
regulations. No assurances can be given that the 
agreement to sell the limited partnership interests will 
be consummated. 

Further, no assurances can be given that California 
Gardens can produce sufficient revenues or sufficient 
proceeds from a sale to enable Pyramidwest and CHI 
to realize their investments in it. 
Other Proposed Health Facility Investments 

CHI is presently studying the possibility of invest- 
ing in other health care programs including one 100- 
bed nursing home to be owned and operated by Cal 
Care I Investors for individuals in need of long term 
care for the developmentally disabled. A third invest- 
ment under consideration includes a group medical 
practice facility. No assurances can be given that these 
developments can be financed, and, if financed, that 
they can be operated at a level sufficient to pay the 
costs of operation and to service their respective debts. 



Community Bank of Lawndale 

The Community Bank of Lawndale opened for 
business on June 20, 1977 with an initial capitalization 
of $2,000,000. Pyramidwest purchased 90 percent of 
the capital stock for $1,800,000. The remaining 10 
percent of the capital stock was purchased by organiz- 
ers and directors of the bank. One organizer and 
director is the President of Pyramidwest. Subsequent 
to opening for business the bank reimbursed Pyramid- 
west for advances, consisting of net preopening ex- 
penses and for leasehold improvements and furniture 
and equipment expenditures. 

The bank offers commercial banking services to a 
primary market area in the city of Chicago which 
includes the communities of North Lawndale, East 
Garfield Park, West Garfield Park, South Austin, 
South Lawndale and portions of the Near West Side. 
As of June 30, 1981 total deposits in the bank were 
$11,379,643. 

Bank depositors include area small businesses, 
institutions, agencies and individuals owning more 
than 3,500 accounts. Twenty-nine persons are em- 
ployed by the bank. Revenues of $819,518 were 
generated by the bank for the six months ended 
December 31, 1980, constituting 25 percent of the 
consolidated revenues of Pyramidwest. Among the 
services offered by the bank are: demand deposit 
accounts, time deposit accounts, commercial loans, 
real estate loans and consumer loans. 

The bank expects to occupy permanent quarters as 
a tenant in Lawndale Towers, which is expected to be 
ready for occupancy in 1982. Pending relocation, no 
assurances can be made that the bank's operations will 
be profitable, or that, after relocation, the bank will be 
able to purchase the equipment and supplies required 
to occupy new facilities, and pay the cost of occupancy 
and continue to realize a net profit from operations. 

A Comprehensive Approach 

Pyramidwest Development Corporation as a com- 
pany is a well funded, ambitious community develop- 
ment corporation, accused by many of trying to do too 
many things on too large a scale. 

Despite this, it is deeply committed to the overall 
redevelopment of the Lawndale area. The scope and 
scale of our redevelopment plans are much broader 
and more fundamental than those of any private 
community-based comm.unity development group 
anywhere in this country. What we propose to do is to 
build an area economy here in Lawndale. When one 
speaks of the existence of an economy, he refers to a 



57 



piece of geography where a large group of people 
engage in all of the productive, consumptive, social 
and spiritual activities that are common to our society. 
It is a place where people engage in work, commerce, 
recreation, religious, family and social activities. An 
economy provides opportunities to make a living at 
every occupation from the laborer to the entreprenuer 
who employs thousands of laborers. An economy 
produces many of the goods that it consumes and it 
uses many of the goods that it produces to purchase 
other goods to consume, or to purchase raw material 
for new production. An economy provides a full range 
of necessities and luxuries required for, or desired by, 
most of the people who live in the area served by it. It 
is a complete enough unit of economic activity that the 
labor force spends the money which it earns in the 
community for most of the things that it consumes 
and saves; things like housing, food, clothing, trans- 
portation, and investments. At the second state, the 
producers and retailers of the housing, food, clothing 
and transportation, from whom the labor force pur- 
chases these items, uses the profit or returns that they 
receive from the sale of these items to purchase the 
same items that they need or desire from others right 
there in the same area. Owners of the land and 
business persons who own the manufacturing plants 
and the commercial centers, and the service business 
that employ the labor force also purchase their 
consumptive items within the area. Furthermore, 
when laborers, retailers, producers, land-owners and 
business persons desire to save or engage in other 
financial activities they create and perform such 
transactions in financial institutions which are located 
in the same area. These institutions serve as the outlet 
or agency for transfers of funds between individuals 
and businesses, savings and investment by individuals 
and business, loans and mortgages for personal and 
business purposes and financial dealngs with the 
outside world. 

In essence, what the creation of a local economy 
includes is all of the elements of an economic system 
that a given geographic area can feasibly create and 
has the demonstrated capability to trade or exchange 
for those things that the area does not produce itself 
In addition, an area has an economy if the money 
produced in it is enough to provide for the needs and 
desires of its inhabitants — and that money is expended 
by those inhabitants between and among themselves; 
time and time and time again before it goes out of the 
area. 



Of course, in this day and time, it is impossible for 
any area to claim that a piece of geography in a city, 
state, region, or even a nation can be an indef>endent 
economy because there is mutual interdependence not 
only among various cities, regions and nations but 
throughout the world as a whole. The best that we can 
expect to do is to become limited producers of goods 
and services that have some economic value to other 
areas: that is capable of generating enough income 
from the production of such goods and services to 
financially support the inhabitants of his community. 
This is economic and community development. 

Policy Recommendations 

In general, the national economic climate has not 
been kind to community development organizations; 
just as they got geared up to undertake multiple 
housing and economic development projects, the 
economy turned sour. To stay in business when the 
construction industry was severely curtailed, consum- 
ers sales were way down, and competition was keener; 
it was hard even for experienced business persons. For 
community businesses it is a life and death struggle. 
Obtaining capital to start new businesses was an even 
more discouraging affair. The federal government 
should develop and initiate policies which make 
private industry in communities like Lawndale more 
attractive by providing tax incentives, etc. . . . 

Another hazard for all community development 
groups is government regulation and the extensive 
layers of bureaucratic approvals. One government 
agency's regulations or grant conditions may come 
into direct conflict with another agency's, and approv- 
al of both may be required for the same project. This 
happened to Pyramidwest with respect to ownership 
of the Community Bank of Lawndale and it almost 
scuttled the whole effort. CSA sought to impose 
ownership restrictions that were in conflict with bank 
regulatory policy. Fortunately, the Appeals Court 
decision has laid all this to rest. In 1969 this 
community development groups was not experienced 
enough in dealing with various government agencies 
to anticipate all these wrinkles; now it is wiser. 

The federal government should develop policies 
which seek to provide relief from the extensive layers 
of bureaucratic approvals required for community 
organizations to compete in the traditional market 
place, or provide adequate technical assistance pro- . 
grams to facilitate business development. I 

The Judge Austin Decision requires that for every ■ 
one unit the Chicago Housing Authority leases in a 



58 



community which is 1/3 minority, an additional three 
units will have to be leased in a community which has 
a no restrictive housing policy. This probably is the 
classic example of a good cause converted to a bad 
effect. 

Originally community groups sought the protection 
from urban renewal (gentrification) projects which 
had seen either the complete dismantling of a commu- 
nity and the wholesale removal of its residents or 
replacement projects that fell in one of two categories, 
luxury high rise apartments or the dreaded high rise 
ghettos called "projects." 

Having seen Chicago's trends regarding these is- 
sues, the west side organized to prevent a reoccurance 
of what happened on the south side. Three major 
events happened as the result of the organized effort: 
1. Community groups in conjunction with the 
American Civil Liberties Union (ACLU) filed a suit 
in the federal courts which resulted in the Judge 
Austin Decision. 



2. A major experimental project was embarked 
upon to see whether a large scale scattered site 
housing rehab project would be successful in the 
inner-city, which resulted in the Douglas Lawndale 
Project containing 525 units. 

3. Because of the threat of public housing being 
constructed in restrictive (white) neighborhoods 
and the implied immigration of minorities into 
those areas, public housing projects became virtual- 
ly non-existent in both white and minority commu- 
nities because of the Judge Austin Decision. 

The only avenue by which a community group can 
develop a publicly funded guaranteed project is to 
submit to a long complicated and expensive exception 
process whereby the court declares that a particular 
project is an exception to the Austin ruling. In terms 
of policy formation there is probably no more impor- 
tant than the amendment or repeal of the Judge 
Austin Decision. 



59 



Housing Problems of Hispanics in 
Chicago 

by Mario Lopez, Executive Director, Community 
Housing Education Corporation 

While it must be acknowledged that housing, an 
integral part of the social fabric such as politics, 
economics and culture, it is the intention of this paper 
to point out housing problems being faced by a 
substantial part of the American public: Hispanic 
Americans or as many of us prefer to be called, 
LATINOS. 

It is also the intention of this paper to point out 
possible methods of addressing the housing problems 
faced by Latinos, based upon the experiences derived 
from the work of the Community Housing Education 
Corporation (CHEC). The bulk of the recommenda- 
tions presented herein should be viewed as interim and 
short-term solutions aimed at relieving the immediate 
daily housing crises being faced by countless Latino 
families, and not as permanent lasting solutions, for it 
is not until Latinos obtain substantial decent employ- 
ment and develop strong economic and political bases 
that the housing problems for Latinos can truly be 
resolved. 

With the advent of federal budget cutbacks, result- 
ing in the drastic reduction and/or total elimination of 
housing subsidies, rehabilitation training programs 
and other much-needed social services, the ability of 
Latinos and other low income residents of Chicago to 
obtain decent affordable housing will be seriously 
impaired. The dream of "a decent home for every 
American" as envisioned by the 1974 Housing Act, 
for Latinos in this country will become nothing more 
than a dream. 

Thus it is extremely important at this time to call 
attention to the growing housing crisis being faced by 
low and moderate income residents across this nation, 
but even more so, by Hispanic Americans, many of 
whom are at the bottom of the socio-economic and 
political scale, far below all other minority groups. 

This paper will attempt to address some of the 
problems encountered by Latinos in the area of 
housing as well as to point out possible methods of 
addressing these problems, using the experience 
gained from the work of the Community Housing 
Education Corporation of Chicago. 

CHEC Activities 

Incorporated in 1974 as an attempt to address the 
housing and youth employment needs of the predomi- 



nantly Spanish-speaking Puerto Rican community of 
West Town/Humboldt Park on Chicago's Near North 
Side, the Community Housing Education Corpora- 
tion, better known as CHEC, has developed into one 
of the largest Latino neighborhood development 
corporations in the city of Chicago. 

CHEC's programs have been traditionally devel- 
oped through the direct involvement of local area 
residents who are the direct beneficiaries of such 
programs. Perhaps it is this element of local neighbor- 
hood control, citizen participation and grass-roots 
planning that has most distinguished the work of 
CHEC from that of other development entities which 
totally disregard a neighborhood's hopes, dreams and 
wishes and attempt to implement elaborate plans 
created behind the closed doors of some government 
or private agency's board room. 

It has been CHEC's experience that such neighbo- 
rood development, devoid of neighborhood resident 
participation and control, almost always results in the 
massive displacement of existing neighborhood resi- 
dents as a more affluent higher income "gentry" takes 
the place of the former moderate and low income 
residents. 

In October of 1979, as a result of the need to impact 
upon an increase in gang activity and violence at that 
time in the East Humboldt Park neighborhood, a 32- 
square-block area bounded by North, California and 
Western avenues and Division street, CHEC initiated 
a program of rehab employment training in which 
local neighborhood youths identified by neighborhood 
residents, received training in the rehabilitation of 
housing in their neighborhood, as an alternative to 
street gang involvement, juvenile delinquency and 
crime. 

The program, known as the East Humboldt Park 
Rehab Employment Training Program was initiated 
under contracts with the Department of Human 
Services of the City of Chicago and subsequently was 
transferred to the city Department of Housing. Under 
the program, unemployed neighborhood youth, most- 
ly high school drop-outs and many involved in 
juvenile delinquency and street gangs, received train- 
ing in the actual rehabilitation of housing including 
carpentry, electrical work, plumbing, drywall and 
plastering, masonry work, roofing, floor finishing and 
other rehab skills, under the supervision of CHEC's 
construction personnel and licensed contractors. 

CHEC's experience in rehab training, in addition to 
addressing youth unemployment (55 percent for Puer- 
to Rican youths between the ages of 18-25), juvenile 



60 



delinquency (several months before the program's 
initiation, there had been a rash of gang related deaths 
in some 30 shooting incidents) and the high school 
drop-out rate (75 percent of Latino youths in Chicago 
do not finish high school), served to point out that 
with the involvement of neighborhood residents and 
personnel sensitive to the reality and needs of "proble- 
matic" youths, it was possible to involve these young 
people in constructive activities that would enhance 
their employment and educational opportunities. 

Despite substantial funding from the Community 
Development Block Grant Program of the Depart- 
ment of Housing and Urban Development for con- 
struction supervisors, rehab materials and equipment, 
contractual services and administrative personnel as 
well as the CETA VI Program of the Department of 
Labor for the salaries of the trainees, fringe benefits, 
general liability and workmen's compensation insur- 
ance, the program faced continual funding problems 
since funds for such necessary costs as acquisition, 
back taxes, property insurance, utilities, counselling 
and job placement as well as general operating 
expenses were not provided by the funding contracts. 

Nevertheless, the East Humbodlt Park Rehab Em- 
ployment Training Program resulted in such successes 
as the promotion of nine trainees to construction 
supervisory personnel, salary increases from $7,800 
per year to $15,000 per year, the placement of trainees 
in professional union construction, outside employ- 
ment and continuing education, the complete renova- 
tion and subsequent sale of a three-story brick 
structure at 2524 West Thomas Street and the 
development of a low interest (10 percent) mortgage 
loan program for the acquisition of homes by residents 
of East Humboldt Park, known as the East Humboldt 
Park Mortgage Loan Program. 

At present, efforts are underway to obtain funding 
for the salaries of the trainees in order to continue the 
Rehab Employment Training Program. With the 
elimination of CETA VI funding, trainee salaries will 
have to be procured from private sources. In the 
meantime, CHEC is about to initiate a new venture in 
which construction will be done by professional 
Latino and minority contractors that will hire 
CHEC's former trainees. It is anticipated that this new 
program will produce a greater number of units within 
a relatively short period of time and thus attempt to 
better meet the tremendous need for decent affordable 
housing units in the East Humboldt Park neighbor- 
hood. 



The East Humboldt Park Mortgage Loan Program 
is a cooperative effort between neighborhood resi- 
dents, the State of Illinois Treasurer's Office, Pioneer 
Bank and Trust and the city of Chicago Department 
of Housing. Under this program, the State Treasurer 
deposits funds at Pioneer Bank at a lower than market 
interest rate and the bank in turn provides low interest 
mortgage loans. This program is another effort to 
stabilize the East Humboldt Park neighborhood. By 
providing a financing mechanism that facilitates the 
acquisition of existing housing, area residents can now 
become owner occupants. As owner occupancy in- 
creases, it is anticipated that better maintenance, 
greater owner involvement and more rehabilitation 
will result in a general improvement of the area. 

CHEC's role in the program, after having created it 
and negotiated agreements with all parties involved, is 
one of overall coordination and marketing. Clients 
interested in acquiring a home are counselled by the 
Spanish Coalition for Housing, a HUD certified 
housing counselling agency, and are then assisted in 
finding a property by CHEC's staff. In addition, 
clients are also provided with a no-cost inspection of 
the properties that they visit. Property visits are 
arranged by CHEC staff who also conduct the 
inspections and complete an inspection report indicat- 
ing to the client the condition of the property, 
rehabilitation needed and an estimate of the cost of 
such rehabilitation. 

The role of the Department of Housing is that of 
providing no-interest deferred loans for a portion of 
the cost of rehabilitation to persons who acquire a 
property under the program. The amount of his 
second loan is dependent upon a person's income and 
family size and is repayable to the city only in the 
event the person decides to sell, transfer or move from 
the property. 

Although CHEC itself is not directly involved in the 
provision of housing counselling (this service, as 
previously mentioned, is provided by the Spanish 
Coalition for Housing whose service area includes the 
West Town Humboldt Park community), our experi- 
ence has been that such services as pre-purchase 
counselling and default counselling are extremely 
necessary and valuable for Spanish-speaking persons, 
since the average individual (Spanish-speaking or not) 
knows very little of the complexities of buying and 
owning a home. 

Another area of activity of CHEC, has been the 
provision of technical assistance and housing services 
to community residents. These services and technical 



61 



assistance range from an explanation of the municipal 
building codes; property inspections to determine 
building conditions and feasibility of rehabilitation; 
referrals to contractors and architects; explanation of 
landlord/tenant rights and responsibilities; assistance 
in the purchasing of materials and equipment and 
advice on proper construction methods. 

Other CHEC activities include the conducting of 
workshops, discussions, forums and seminars on 
building maintenance, energy conservation and other 
housing related topics, as well as the rental, manage- 
ment and maintenance of housing units for low and 
moderate income area residents. 

Although limited in scope due to staffing limita- 
tions, we find that these services are extremely 
necessary for the predominantly Spanish-speaking 
community that we serve. One visit to housing court 
on the 14th floor of Chicago's Daley Center will point 
out the tremendous number of persons who are not 
aware of even their basic rights and responsibilities 
and thus become victims of unscrupulous landlords 
and real estate agents. For Latinos, the problem is 
greatly exacerbated due to the fact that Spanish- 
speaking persons often have difficulty in reading and 
understanding apartment leases, sales contracts, evic- 
tion notices and court summonses, all of which are 
almost always in English. 

Many property owners when receiving a court 
summons (with a seemingly undecipherable violation 
sheet listing only municipal building code numbers) 
have little or no way of understanding what they are 
being charged with before appearing in court. By 
contacting CHEC, our bilingual staff can give the 
property owner an understandable interpretation and 
refer him/her to a reputable architect and contractor 
that can be of assistance in order to comply with the 
building codes. 

In a day and age of modern conveniences and 
accessibility of such commodities as television, tele- 
phones and others, it is difficult to believe the fact that 
many of Chicago's residents live in extremely substan- 
dard housing. This is especially true of many Latinos 
who, because of their undocumented status and thus 
fear of possible deportation, become victims of some of 
the worst housing abuses. It is quite common for our 
office to receive requests for our intervention because 
a landlord refuses to exterminate, or because the only 
washroom facility a family might have is a hole in 
their washroom floor because the owner has been 
promising to replace the water closet, or because a 
tenant has to set buckets and containers under roof 



leaks every time it rains because the landlord refuses 
to repair the roof Our experience has pointed out that 
there is a great need to conduct massive educational 
campaigns through the printed as well as electronic 
media so that more Latinos can be aware of their basic 
rights and steps they can take to protect those rights. 
Again, as federal funding cutbacks reduce or perhaps 
totally eliminate legal assistance centers for low 
income residents it will be necessary for such agencies 
as the State's Attorney Criminal Housing Manage- 
ment personnel and the Department of Inspectional 
Services to take strong measures to insure that the 
health, safety and welfare of all residents of Chicago is 
safeguarded. 

Another problem we find that occurs frequently in 
the Latino community is the lack of knowledge of 
construction materials, methods and techniques (and 
again, the municipal building codes) on the part of 
"do-it-yourself handymen who, although they may 
have some experience in construction in Mexico, 
Puerto Rico or some other Latin American country, 
are not aware of the fact that climate and other 
conditions in this country affect the way in which 
construction is carried out. 

We have found countless instances where, in an 
effort to contain costs by performing their own labor 
("sweat equity"), these Latino handymen often have 
to re-do their work and thus in the long run end up 
spending more money either because they failed to 
obtain a permit where necessary in order to perform 
repairs and the city's inspectors ordered that necessary 
permits be obtained, or because improper methods and 
materials were utilized. This basic knowledge of 
construction on the part of handymen can, on the 
otherhand, be a valuable asset in addressing the 
rehabilitation needs of the Latino community, of 
course, with the proper supervision, orientation and 
training. An excellent example is that of several of 
CHEC's construction supervisory personnel, some of 
whom started out as trainees with some experience in 
Puerto Rico and have gradually become extremely 
proficient. 

Many Spanish-speaking clients serviced by CHEC, 
routinely complain of the fact that when going to such 
places as the Department of Inspectional Services, the 
Cook county Assessor's Office, the Circuit Court 
(housing) and other places, there are few signs or 
directions either in English or Spanish, explaining 
certain basic procedures and the location of certain 
department sections. We feel it would be extremely 
beneficial to have such information clearly posted in 



62 



Spanish and English with leaflets or brochures that 
explain the various forms used which appear in 
English. A good example of this is the bilingual 
"bond" sheet that a person signs and receives when 
arrested and subsequently posts bond in the Circuit 
Court system. 

It has been CHEC's experience that while there are 
many community organizations, agencies and groups 
in the various Latino neighborhoods, some with long 
track records and others relatively new, providing 
various types of important social services in areas of 
welfare, employment, education and others, few if any 
of these organizations and groups have ventured into 
initiating housing activities. 

Through public speaking engagements and work- 
shops, CHEC has been encouraging other Latino 
groups in other neighborhoods to begin assessing the 
feasibility of implementing housing activities as part of 
their programs. Such activities can range anywhere 
from distributing public information on the rights and 
responsibilities of tenants and landlords, initiating 
negotations with local banks and savings and loan 
associations, housing counselling, and referral services 
to full scale neighborhood development, including 
housing rehabilitation and new construction. 

It is worthwhile to note here that CHEC has 
received significant technical assistance from the 
Chicago Rehab Network, an organization composed 
of various neighborhood based community develop- 
ment groups from various Chicago neighborhoods 
such as Uptown, South Shore, Kenwood-Oakland, 
South Austin, Garfield Park, West Town/Humboldt 
Park and others. The Network, in addition to serving 
as an important information sharing vehicle, has also 
been able to provide assistance that includes architec- 
tural services, feasibility assessments, financial packag- 
ing, property inspections and other services to its 
member organizations and constituencies. 

It is unfortunate that despite the valuable assistance 
provided by the Chicago Rehab Network, the city of 
Chicago (which has provided Community Develop- 
ment Block Grant funds) has not given priority to 
funding of the Network's technical assistance pro- 
grams. Thus an entity which could provide valuable 
services to assist neighborhood development efforts in 
other Latino communities, may not continue to exist 
unless adequate funding support is obtained from 
public and private sources. 



Austerity and The Need for Additional Services 

With the reduction of federal housing subsidies and 
financial assistance it will be necessary for Latinos to 
explore and initiate other ventures to produce decent 
affordable housing. One such possible avenue is the 
development of low-equity condominium and/or co- 
operative housing. Here again, with proper supervi- 
sion by qualified licensed contractors and supervisors 
as well as technical assistance, the talents of local 
residents (who will subsequently occupy these units) 
can be utilized in such areas as security, demolition, 
painting and finishing work and others to reduce 
project costs considerably and thus make the units 
affordable. 

This will of course, require the development of 
incentives for private corporations, individuals and 
financial institutions in order to finance such projects. 
We find that a potential source of such funding can be 
the state's investment portfolio which is quite substan- 
tial. Despite the large amount of funds involved by the 
sale of tax exempt bonds, the State Housing Authority 
has not demonstrated the ability to substantially 
address the housing needs of low income Latinos and 
other minorities. Specifically, it should be noted that 
in the case of Illinois, the Illinois Housing Develop- 
ment Authority does not provide the public with 
much information that it is required to do so by law. 
Section 305 of the Illinois Revised Statutes, requires 
the Illinois Housing Development Authority (IHDA) 
to annually file a written report with the governor that 
includes a complete list of: 

1. Applications to IHDA for mortgage loans and 
other financial assistance. 

2. Projected activities for the following fiscal year. 

3. Developments financed by IHDA, the owners 
of such developments and the amount of financial 
assistance for each IHDA financed project. 

4. Distribution of dwelling units and a rent struc- 
ture estimate for each development financed during 
a fiscal year. 

A review of the 1980 IHDA Annual Report 
indicates that there is no list of applications for 
mortgages or other financial assistance, no names of 
the owners of developments financed by IHDA, no 
estimated rent structures and no dwelling unit distri- 
bution for family dwelling projects in the Annual 
Report. Without greater public access to the data on 
IHDA's activities, the public is unable to evaluate 
IPDA's performance and hold IHDA accountable to 
its legislated purposes. Thus there is a need for a state 
housing agency that is sensitive to neighborhood based 



63 



housing development that can promote afTordable 
housing for low income Latinos and other minorities. 

It has been CHEC's experience that many Latino 
small property owners have been victims of unscrupu- 
lous contractors and repairmen. This is due in part, to 
the lack of English communication ability on the part 
of these Latino small property owners as well as to 
their lack of knowledge of legal or paralegal matters 
such as contracts, licensing, bonding, workmen's 
compensation requirements, and of course, a lack of 
basic knowledge of proper repair work. This continues 
to result in the literal loss of thousands of dollars by 
Latino homeowners who fail to obtain signed con- 
tracts to protect their interests, or who hire unquali- 
fied persons that fail to perform repairs agreed upon. 
Often these homeowners find that after agreeing on a 
certain fee, they are charged a much higher fee by the 
repairmen because there was never a written contract. 
Since cost is a very important factor to the low and 
moderate income Latino property owner, almost 
always he/she will make a decision to hire a repairper- 
son based solely upon the lowest cost estimate quoted. 
While it may be possible for a legitimate qualified 
contractor to make an extraordinarily low bid on a job 
due to having materials left from prior jobs or due to 
the necessity to obtain work and still perform a 
satisfactory job, this is not always the case. Thus 
without a basic knowledge of reasonable cost estimates 
for repair work, the low and moderate income Latino 
property owner is left at the mercy of almost any 
individual who comes along and states that he can 
perform certain repair work at a certain cost. 

A short-term method of addressing this problem is 
the provision of referral services in which property 
owners can be referred to legitimate, qualified and 
reputable contractors and repair persons. As an 
organization involved in providing such services on a 
limited scale, CHEC encourages other Latino organi- 
zations to share such information and initiate similar 
activities so that a broader constituency can benefit. 

Perhaps a more effective method of addressing this 
problem on a long-term basis is the creation of 
community based, for-profit construction companies. 
Such models, already being pursued by other commu- 
nity organizations (for example, 18th Street Develop- 
ment Corporation in the Pilsen Area and the Bicker- 
dike Redevelopment Corporation in the West Town 
community), not only serve to provide qualified 
contractor services for the neighborhood, but because 
of their accountability to the neighborhood (through 
the shareholders and Board of Directors) have a great 



degree of sensitivity to the problems faced by Latinos 
and serve to provide additional employment opportu- 
nities for local Latino youths and adults. Another 
benefit of such ventures, can be the use of the 
construction company's profits to sustain its non- 
profit "parent" organization and thus enable it to 
continue providing valuable services and organization- 
al activities in spite of funding cutbacks. 

With the recent emphasis on energy conservation 
and the availability of tax credits, weatherization 
programs and other energy conservation incentives, 
there is a potential problem of additional displacement 
of low and moderate income Latino families through 
such programs. Due to the lack of strict guidelines, 
screening and other precautionary measures, unscru- 
pulous slum landlords can use low and moderate 
income families to apply for, and receive financial 
assistance (since funds are usually available to proper- 
ty owners that rent to low and moderate income 
persons) for weatherization repairs, make the repairs 
and then raise the rents to evict the low and moderate 
income families that enabled them to receive the 
assistance in the first place. Thus what apparently 
started out as a well-motivated effort on the part of the 
public sector, can be turned into a for-profit situation 
that subsidizes slum landlords. 

In addition to the lack of neighborhood stability, 
due in part, to the low number of Latino owner 
occupants, we find that community improvement 
efforts to assist low and moderate income Latino 
families are also hampered by the lack of stability of 
Latino community organizations that provide valuable 
services and conduct worthy activities. These organi- 
zations, almost all of a non-profit status, experience 
great difficulty in maintaining a continuity of services 
and activities due to their limited funding base. Many 
of them, as funding fluctuates, are forced to continual- 
ly relocate and/or reduce services in order to afford 
occupancy costs. 

With the existence of a substantial number of 
abandoned properties owned by HUD or private 
owners with accumulated back-taxes, it would be 
extremely beneficial for HUD or the County Assessor 
to encourage and facilitate the acquisition of such 
properties by Latino neighborhood improvement orga- 
nizations for the purpose of rehabilitating and subse- 
quently converting them for use as community service 
centers and or mixed use residential/community 
service facilities. The community organizations could 
thus acquire greater stability by owning property they 



64 



can occupy and subsequently use to finance other 
neighborhood improvement ventures and activities. 

The role of the media in addressing the housing 
problems of Latinos has, in our estimation, been 
greatly underutilized. Public response has always been 
overwhelming when CHEC staff have been inter- 
viewed on radio and television programs. Much 
greater use of radio, television, newspapers, magazines 
and other media is needed to promote a widespread 
awareness of landlord/tenant rights and responsibili- 
ties, precautions against unscrupulous contractors, 
energy conversation measures, and other housing 
topics. The same holds true for other facilities fre- 
quented by the public such as the United States Post 
Office, the Daley Civic Center, other municipal, 
county and state offices, the public transportation 
system, shopping malls and supermarkets, all of which 
should be utiliz d to display and disseminate impor- 
tant housing related public service information in 
Spanish and English. 

With recent anti-tenant rights legislation and activi- 
ties that adversely affect Latinos and other low income 
residents, it will become increasingly important for 
Latino tenants and Latino owners of small properties 
to become more organized and conduct widespread 
activities aimed at preserving their rights and protect- 
ing their interests. Such organizational efforts could 
include establishment of local, city-wide, county-wide 
and regional tenant councils and property owner 
associations. 

Another housing problem faced by Latinos, is the 
lack of Latino housing professionals. It is a well- 
known fact that traditionally the various major 
construction trades have made it very difficult for 
Latinos and other minority groups to become carpen- 
ters, plumbers, electricians and other trade union 
journeymen. It is important to note that several 
community organizations (such as the 18th Street 
Development (Corporation) have recently developed 
working relationships with the carpenters union to 
prepare Latino union journeymen. It is hoped that 
other unions will follow this example of a worthy 
effort so that more Latinos can enter the building 
trades. 

There is a similar need for other housing profession- 
als such as construction supervisors, mortgage finan- 
ciers, appraisers, construction managers, architects, 
contractors, cost estimators and specifications writers, 
urban planners, construction specialists and others. To 
alleviate this problem, it is important that community 
organizations, educational agencies and institutions 



encourage and orient Latino youths not only at the 
high school level, but beginning at the elementary 
school level, so that these youth can become interested 
in entering the various housing professions. The 
various colleges and universities should intensify their 
efforts so that more Latinos can pursue housing 
careers. 

It is equally important for colleges and universities 
to modify and expand their existing curricula in such 
fields as architecture and urban sciences in order to 
better address the housing needs of Latinos and other 
low and moderate income communities. Traditionally, 
architecture and urban science students receive an 
orientation that teaches them to address a more 
affluent middle and upper income, non-minority 
clientele from areas such as Wilmette, Evanston, 
Skokie, Lincoln Park and other more well-to-do 
communities. Thus while these architecture and urban 
science students may become very well versed in 
developing high-rise condominiums along Chicago's 
lakefront, or planning a shopping mall in Oak Brook, 
or designing a new church in Oak Park, they learn 
little or nothing about tenants without heat in their 
apartments in Uptown, or about substandard living 
conditions in slums in Chicago's not so well-to-do 
neighborhoods, or displacement of Latino families in 
Humboldt Park, or of persons discriminated against 
when attempting to rent an apartment in Wicker Park 
because they gave a Spanish surname when inquiring 
about the apartment's availability. 

Another problem contributing to the lack of stabili- 
ty, abandonment, deterioration and the subsequent 
frustration and sense of hopelessness on the part of 
area residents in Latino and other low and moderate 
income neighborhoods, is the fact that these neighbor- 
hoods almost always receive far less and more inferior 
municipal services such as sidewalk repairs, street 
lighting, refuse pick-up, street cleaning and removal of 
abandoned automobiles than other more affluent 
communities. It is not difficult to understand how 
Latinos and other residents of neighborhoods like 
Humboldt Park, Pilsen and other low income areas, 
when having to live day after day facing conditions of 
unemployment, street gang activity, lack of essential 
municipal services, abandoned buildings, arson, deteri- 
oration of the housing stock due to the high degree of 
absentee owners (many who are outright slumlords), 
arson and other signs of visible neglect, eventually 
begin to loose their sense of permanency and identifi- 
cation with their community and with hopes of 
perhaps finding better conditions in other areas (which 



65 



ironically becomes nothing more than just hope since 
they learn conditions are almost exactly the same in 
every low income neighborhood), become the victims 
of displacement as they are moved from neighbor- 
hood-to-neighborhood. 

Contributing to this visible neglect of neighbor- 
hoods is the lack of promotion and publicly funded 
support for neighborhood art and esthetic improve- 
ments that address the cultural identity, realities, 
problems and needs of the Latino community. Neigh- 
borhood art can be extremely useful in promoting 
community pride, a sense of neighborhood identity 
and permanency and overall neighborhood stability. 
Local Latino artists have attempted to address this 
problem with great difficulties due to very limited 
resources but nevertheless have produced neighbor- 
hood murals and sculpture with the involvement of 
local residents (and quite often providing training for 
neighborhood youths under summer jobs programs) in 
the process. 

Another area in which we find that Latinos face a 
housing problem, based on surveys to determine the 
services and fee structures of professional property 
management firms, is the lack of professional Latino 
property management firms. Thus, we find a substan- 
tial number of large multi-family properties in the 
Latino community that are managed by insensitive 
and oftentimes unscrupulous agents who do not have 
Spanish-speaking personnel to serve a predominantly 
Spanish-speaking tenant population. Our office rout- 
inely receives complaints of such property manage- 
ment agents who defraud tenants out of their security 
deposits, or who attempt to lock tenants out of their 
apartments or illegally cut off utilities or enter tenants' 
apartments without the tenant's permission, or who 
attempt to evict tenants without due legal proceess. 

Our experience has shown that these abuses are not 
limited to non-Latino property owners. Quite the 
contrary, in many instances we have learned of Latino 
owners of multi-family buildings who refuse to give 
rent receipts to their tenants, or who refuse to give the 
written 30-day notification required in order to 
increase rents simply threatening their tenants if they 
do not pay up. 

The development of professional Latino property 
management firms that could better service a Spanish- 
speaking clientele could help to alleviate some of the 
problems faced by Latino tenants and could also help 
to provide additional job opportunities for Latinos in 
such areas as security, maintenance engineering, 
management and administration. Other possible ser- 



vices that could be provided by such Latino profes- 
sional management firms could be the screening of 
tenants and landlords in order to match up responsible 
tenants with responsible landlords and advise both of 
their rights and •esponsibilities. We recognize how- 
ever, that in the long run, the only real way to create 
neighborhood stability is through an increase in the 
degree of owner occupants. However, since home 
ownership is not always an option in certain instances 
because of a person's age or circumstances, the 
development of a professional Latino management 
firm could definitely address the needs of Latinos that 
were not able to or chose not to become homeowners. 

As long as Latinos are not directly involved in key 
policy-making and decision-making positions of enti- 
ties that directly and indirectly affect the Latino 
community in the public and private sectors, it can be 
anticipated that few, if any, major positive changes 
can, or will result that will address the housing and 
other needs of low and moderate income Latino 
families. As long as Latinos are not involved in top 
management and policymaking roles in banks, savings 
and loans, insurance companies, government (at all 
levels), private corporations, business and professional 
institutions, Latinos will continue to experience redlin- 
ing, disinvestment in the neighborhoods, high unem- 
ployment, lack of decent affordable housing, lack of 
quality education and the existence of the type of 
development opposed by CHEC: development that 
results in the displacement of low and moderate 
income families in the Latino and other communities. 

Despite the various areas of activity of CHEC, we 
have found that the needs of the West 
Town/Humboldt Park Community are so great that 
there is enough room for many community housing 
education corporations. It is estimated that it would 
take 100 million dollars to address the housing needs 
of each of Chicago's communities. Thus we can see 
that now, more than ever, there is a need to make 
more efficient use of existing resources, as well as to 
develop innovative approaches to address the housing 
crisis faced by Latinos and other low-income people in 
Chicago and across the country. 

Finally, as the low-income housing gap increases 
(Chicago has experienced the net loss of some 55,000 
dwelling units from 1970 to 1979), it will become 
increasingly important for Latinos to be able to put 
aside any organizational and/or ethnic rivalries so 
that Puerto Ricans, Chicanos, Mexicans and all 
Latinos can work together to prevent their further 
displacement from neighborhood to neighborhood. 



66 



The true danger to displacement and the lack of 
decent affordable housing is the resulting dispersal of 
Latinos. This dispersal has a crippling effect upon the 
ability of Latinos to develop a strong organizational 
and political base that will ultimately be one of the few 
if not the most effective means of addressing the 
housing needs of Latinos. 

Specific Recommendations to Address the Housing 
Problems of Latinos 

1. Fostering of more programs such as rehab 
employment training to address the housing and 
employment needs of Latinos. Funding should be set 
aside for such projects in low-income Latino neighbor- 
hoods by government agencies, private foundations 
and corporations. 

2. Development of additional financing mecha- 
nisms such as the East Humboldt Park Rehab 
Employment Training Program, to provide low inter- 
est loans for acquisition and rehabilitation. With the 
anticipation of the city of Chicago's Mortgage Bond 
Program, it is hoped that financial institutions, neigh- 
borhood organizations and the city will be able to 
work together to assure that communities with the 
greatest need receive adequate allocations of funding 
for these low interest loans. Since funds from HUD's 
Community Development Block Grant Program are 
to be utilized, it will be especially important for HUD 
to actively monitor the use of such funds to assure that 
the needs of Latinos and other low-income residents 
are being adequately addressed. 

3. Widespread educational awareness campaigns 
to inform Spanish-speaking residents of their basic 
rights in the area of housing. Such information should 
be available outside of each housing courtroom and 
distributed on a mass basis with the cooperation of the 
city, county and other government agencies with 
Latino community organizations. Greater access to 
the television media should be made available as a 
public service to viewers. 

4. Fostering of additional housing counselling 
programs to inform Spanish-speaking persons of the 
responsibilities and procedures of purchasing and 
owning a home as well as to prevent default and 
subsequent abandonment of additional housing. 

5. Greater monitoring and more expedient en- 
forcement of applicable municipal, county and state 
laws to assure that the life, safety, health and welfare 
of Spanish-speaking and all residents is protected. 

6. Employment of sufficient bilingual personnel in 
city, county and state governmental agencies in direct 



service and policy making roles to insure that re- 
sources and programs are^ implemented to meet the 
needs of Latinos and that Spanish-speaking residents 
can communicate housing complaints. This should 
also be true of other quasi-governmental and private 
agencies such as the Bar Associations, the State 
Housing Agency and others. 

7. Development and use of graphics and signs in 
Spanish and English at municipal, county, state and 
federal offices to inform and direct the public on such 
things as the location and functions of certain offices, 
court procedures, property tax assessments and other 
important public service information. 

8. Requiring of the use of bilingual (Span- 
ish/English) legal forms such as apartment leases, 
eviction notices, court summonses, and building code 
violation notices. 

9. Greater monitoring of contractors and repair 
persons in the Latino community and the establish- 
ment of telephone "hotlines" where Spanish-speaking 
persons can call to receive assistance in recovering 
monies taken by unscrupulous individuals. 

10. Widespread ongoing housing workshops by 
public agencies in cooperation with neighborhood 
groups in the Latino community to inform residents 
about housing related topics such as proper repair and 
maintenance procedures, energy conservation, hiring 
of qualified contractors and repair persons, and 
landlord/tenant rights and responsibilities. 

11. Reorganization of the State Housing Agency 
to assure that decent affordable housing is developed 
for the Latino and other low and moderate income 
communities without displacement of existing resi- 
dents. 

12. Greater monitoring of, and establishment of 
stringent guidelines and/or screening procedures for 
weatherization programs and other energy conserva- 
tion financial assistance programs to assure that public 
monies available through these programs are not used 
to subsidize slum landlords or displace existing low 
and moderate income Latino and other families. 

13. Assistance to neighborhood organizations to 
acquire rehabable abandoned properties for the pur- 
pose of rehabilitating them and converting them for 
use as community service centers and/or mixed use 
residential/service centers. 

14. Greater use of the media and facilities fre- 
quented by the public, such as the United States Post 
Office, banks, savings and loans and title companies, 
supermarkets and shopping malls, public as well as 
private schools to promote widespread awareness of 



67 



landlord/tenant rights and responsibilities, precau- 
tions against unscrupulous contractors, energy conser- 
vation and other important public service housing 
information, as a means of addressing the housing 
problems of Latinos and other low and moderate 
income residents. 

15. Increase in organizational activities by com- 
munity groups, agencies and groups as well as 
informal organizations such as block clubs, church 
auxiliaries, parents clubs and others to promote 
greater awareness of housing problems faced by 
Latinos and other low income residents and to initiate 
projects to actively promote and defend the interests 
of the tenants and small landlords. 

16. Development of professional Latino property 
management firms to manage properties with a 
substantial Latino tenant population and provide 
screening services for tenants and landlords as well as 
to provide employment to local residents and public 
services such as workshops, forums, seminars and 
discussions for tenants and landlords. 

17. Increased public sector financial support for 
neighborhood improvement and beautification activi- 
ties in low-income Latino neighborhoods so as to 
promote greater esthetic appeal as well as a sense of 
permanency, identification with the neighborhood, 
community pride and permanency by involving local 
area residents in the development and planning of 
such activities and giving priority to projects that 
promote the culture of the existing residents. 

18. Modification of the existing curricula of edu- 
cational institutions providing academic programs in 
architecture and urban sciences to provide a more 
well-rounded experience for students in these profes- 
sions. Such modifications should include courses, 
seminars, workshops, discussions and actual field 
experience to introduce and orient students to the 
housing problems faced by the various Latino and 
other low-income communities, actual rehab work 
being conducted in these community groups by 



neighborhood based housing development organiza- 
tions and methods of addressing the housing needs of 
such neighborhoods. 

19. Greater irvolvement on the part of trade 
unions to encourage Latinos and other minorities to 
enter the various building trades through cooperative 
projects with neighborhood based development orga- 
nizations to prepare apprentices and trade journey- 
men. 

20. Improved municipal services to Latino and 
other-low income neighborhoods including street re- 
pairs, sewer repairs, lighting, street furniture, refuse 
pick-up, maintenance of empty lots, removal of 
abandoned automobiles and other services to enhance 
residents' identification with the neighborhood, pro- 
mote community pride and contribute to greater 
neighborhood stability. 

21. Increased student orientation and recruitment 
efforts on the part of educational institutions, educa- 
tional agencies (public and private) and community 
groups to encourage Latinos to enter the principal and 
ancillary housing professions ranging from architec- 
ture, urban planning, construction management and 
specifications writing to mortgage financing, property 
insurance, property appraisal and other aspects of 
development. 

22. Continued and increased financial support by 
the city of Chicago to the Chicago Rehab Network so 
as to enable Latino communities such as Pilsen and 
West Town/Humboldt Park to continue receiving 
technical assistance and services for neighborhood 
development activities that provide affordable housing 
for low and moderate income families. Increased 
financial support would enable other community 
organizations and neighborhood development groups 
in other Latino communities to initiate development 
activities to provide decent affordable housing for low- 
income Latino families in neighborhoods not presently 
being reached by the Network. 



68 



Financiers 



The Real House Divided: Regulations 
that Divide Families 

by Fidel L. Lopez, Director, Area Development 
Division, Continental Illinois National Bank and 
Trust Co. 

Even though my participation in this conference has 
been placed in the segment titled "The Financiers," 
this paper will not deal with economics, banking 
regulations as they affect the involvement of financial 
institutions in providing urban housing, or other 
traditional concerns of the financial community re- 
garding public housing. Rather, this paper intends to 
highlight the need for a reevaluation of public housing 
guidelines as they affect a more human, not financial, 
concern of socially responsible corporations: families, 
the basic unit of a stable society. While at first glance 
this may seem to be an unorthodox area of concern for 
the banking industry, it is still a very real one. For 
banking can serve most effectively and responsibly 
when it can serve a relatively stable, progressive 
community. 

Public, or low-income, housing in Chicago reflects 
the non-integration of the United States' second 
largest city. The fires that consumed entire city blocks 
in the late 1960s riots could not melt the pattern of 
ethnic and racial territories, and in fact caused enough 
fear in the majority population that more than ten 
years later, Chicago remains and is recognized as 
America's "most segregated" urban area. 

Chicago's response to the need for "a decent home 
in a suitable living environment for every American 
family" (a goal promulgated in 1949 by the federal 



govciTiment) was typical for major cities at the time: 
concentrated high-density, high-rise developments. It 
now seems impossible to believe that those responsible 
for such developments could not see what the effects 
of concentrating so many needs and problems within 
such a small physical space would be. Whether they 
did or not, these developments have certainly not 
proved to be "decent homes in suitable living environ- 
ments." The despair, crime and unemployment magni- 
fied in these settings led to Chicago's mayor taking up 
temporary residence in a public housing project. 
Political grandstanding or no, it was a most effective 
vehicle for dramatizing the failures of public housing 
in Chicago. 

The relative scarcity of scattered-site public housing 
in Chicago, due primarily to local resident and 
aldermanic resistance (fueled by the expectation of 
lowered property values as a result of the housing), is a 
primary factor in Chicago's lack of progress. But 
rather than propose means to increase the amount of 
scattered-site neighborhood public housing, our con- 
cern here is for the regulations that tend to both 
perpetuate public housing residents' dependence and 
do harm to both nuclear and extended families. The 
following Table 1, showing demographic trends in 
Chicago Housing Authority projects for the decade of 
1970-80 is of some interest. 

The table shows that in the decade, the number of 
black families increased from 81 percent to 84 percent, 
white families decreased from 18 percent to 14 
percent, and Hispanic families increased from 1 
percent to 2 percent. Perhaps most significant from 
these figures is the proportionally small percentage of 



69 



Hispanic families, even though Hispanics comprise the 
largest and fastest-growing minority group in the 
metropolitan area. Part of the reason for the small 
percentage is, of course, that those Hispanic families 
most in need of subsidized or public housing are often 
in the U.S. illegally, and avoid involvement with any 
unit of government, if possible. But even those who are 
in this country legally apparently do not consider 
public housing as an alternative to older, unsafe 
housing or rent-gouging by unscrupulous landlords. It 
is my contention that regulations developed by hous- 
ing authorities are often insensitive to cultural mores 
of our minority groups, be they Hispanic, Black or 
Oriental. 

There are, for instance, certain guidelines regarding 
the age and sex of children allowed to share bedrooms 
in public housing developments. Oftentimes these 
regulations require that upon attainment of a certain 
age children must be segregated by sex in different 
bedrooms. As a result, families are forced to send sons 
or daughters to live with others in order to maintain 
their public housing unit. These families could, natu- 
rally, look for a larger unit to provide the separate 
bedrooms required, but these larger units are not 
available in the numbers necessary. 

Other regulations tend to disband families by 
concerning themselves with the presence of a grand- 
parent or other elderly family member. These too, are 
often forced to leave their families in public housing to 
live elsewhere due to insensitive and arbitrary regula- 
tions. 

Lest the figures from the Chicago Housing Authori- 
ty be thought of as exceptions, the same general 
pattern is evident in data from the Illinois Housing 
Development Authority as shown by the following 
Table 2. 



Again, it is evident that the minority groups with a 
strong tradition of family structure in their respective 
culture tend noi to use public housing in proportion to 
their percentage of the total population. This is not to 
say that the largest group using public housing is any 
less desirous of maintaining the unity of its family 
units; they are however, adversely affected by these 
regulations as almost any resident family can testify. 

The new administration in Washington has made 
much of reducing the amount of government regula- 
tion in our citizens's lives. "Common sense" is 
preferred to provisions that seem to have been 
developed on a "worst case" scenario. It is this sense 
which I feel must be brought to bear on the regula- 
tions which have been imposed, through the years, on 
the residents of our public housing units. Therefore, I 
am calling for a thorough review of the regulations 
which affect families by every agency responsible for 
public housing. This review should include hearings 
held in the housing developments, and with leaders in 
the various minority communities, whether Black, 
Oriental or Latino. 

As I stated at the beginning of this paper, these 
concerns are probably not those expected of someone 
scheduled as a "financier" at this conference. But that 
should not detract from the validity of the concerns 
expressed herein, nor should it really be surprising. As 
citizens, financiers are just as concerned with the 
problems confronting American society. Perhaps they 
are even a bit more concerned, as both they and the 
stockholders they represent have much to lose in a 
nation where everything possible is not done to 
encourage and support the family unit. It remains the 
basic cell of our national body, and is absolutely 
necessary for the spiritual, as well as the economic, 
health of our communities. 



70 



TABLE 1 

Demographic Trends in Chicago Housing Authority Projects 
Number of Families 1970-80 



Year 


Total 


Black 


White 


Hispanic 


Other 
Races 


Dec. 1970 


38,685 


31,436 


6,806 


365 


78 


Dec. 1971 


39,665 


32,308 


6,878 


393 


86 


Dec. 1972 


40,128 


32,647 


6,962 


428 


91 


Dec. 1973 


40,134 


32,868 


6,727 


448 


91 


Dec. 1974 


39,830 


32,685 


6,591 


459 


95 


June 1975 


40,523 


33,162 


6,605 


657 


99 


June 1976 


41,140 


33,884 


6,493 


664 


99 


June 1977 


41,953 


34,715 


6,450 


694 


94 


June 1978 


43,829 


36,330 


6,685 


709 


105 


Dec. 1979 


44,353 


37,133 


6,371 


742 


107 


Dec. 1980 


44,946 


37,894 


6,195 


746 


111 



TABLE 2 

Illinois Housing Development Authority As of June 1981 



Area 


Sites 


Units 


White 


Black 


Latino 


Other 


South of Stevenson 
Expressway 


5 


1,661 


389 


838 


13 


20 


West of Chicago 
River 


2 


360 


43 


218 


97 





Near North 


5 


1,554 


631 


179 


17 


3 


Lincoln Pk., 
Lakeview, Uptown, 
Edgewater 


4 


825 


560 


108 


21 


42 



71 



There are, for instance, certain guidelines regarding 
the age and sex of children allowed to share bedrooms 
in public housing developments. Oftentimes these 
regulations require that upon attainment of a certain 
age children must be segregated by sex in different 
bedrooms. As a result, families are forced to send sons 
or daughters to live with others in order to maintain 
their public housing unit. These families could, natu- 
rally, look for a larger unit to provide the separate 
bedrooms required, but these larger units are not 
available in the numbers necessary. 

Other regulations tend to disband families by 
concerning themselves with the presence of a grand- 
parent or other elderly family member. These too, are 
often forced to leave their families in public housing to 
live elsewhere due to insensitive and arbitrary regula- 
tions. 

Lest the figures from the Chicago Housing Authori- 
ty be thought of as exceptions, the same general 
pattern is evident in data from the Illinois Housing 
Development Authority as shown by the following 
Table 2. 

Again, it is evident that the minority groups with a 
strong tradition of family structure in their respective 
culture tend not to use public housing in proportion to 
their percentage of the total population. This is not to 
say that the largest group using public housing is any 
less desirous of maintaining the unity of its family 
units; they are however, adversely affected by these 
regulations as almost any resident family can testify. 



The new administration in Washington has made 
much of reducing the amount of government regula- 
tion in our citizens's lives. "Common sense" is 
preferred to provisions that seem to have been 
developed on a "worst case" scenario. It is this sense 
which I feel must be brought to bear on the regula- 
tions which have been imposed, through the years, on 
the residents of our public housing units. Therefore, I 
am calling for a thorough review of the regulations 
which affect families by every agency responsible for 
public housing. This review should include hearings 
held in the housing developments, and with leaders in 
the various minority communities, whether Black, 
Oriental or Latino. 

As I stated at the beginning of this paper, these 
concerns are probably not those expected of someone 
scheduled as a "financier" at this conference. But that 
should not detract from the validity of the concerns 
expressed herein, nor should it really be surprising. As 
citizens, financiers are just as concerned with the 
problems confronting American society. Perhaps they 
are even a bit more concerned, as both they and the 
stockholders they represent have much to lose in a 
nation where everything possible is not done to 
encourage and support the family unit. It remains the 
basic cell of our national body, and is absolutely 
necessary for the spiritual, as well as the economic, 
health of our communities. 



72 



The Urban Property Tax And Minorities 

by Arthur Lyons, School of Urban Planning and 
Policy, University of Illinois, Chicago 

The topic of my paper — nonuniformities and the 
shifting burden of the urban property tax — may not, 
at first, seem related to the dual housing market, but it 
is. The property tax is one of the largest single costs of 
homeownership, and it often takes up to a third of 
monthly rental payments. There is evidence, however, 
that the tax is borne disproportionately by residents of 
predominantly minority neighborhoods, relative to 
residential taxpayers in other neighborhoods. In addi- 
tion, the last decade or so has seen a general shift of 
the property tax burden from nonresidential to resi- 
dential taxpayers. This further accentuates the impact 
of nonuniform tax burdens among users of residential 
property. 

This paper will review some background about the 
property tax. It will then summarize the evidence that 
minority and lower income households tend to bear 
more than their share of the burden. Finally, four 
suggestions for improving the situation will be offered. 

Property Tax Background 

According to law, the assessed value of any individ- 
ual property is supposed to be at the same fixed 
percentage of market value as every other property in 
the same use class. This fixed percentage is called the 
assessment ratio. For example, in Cook County all 
property in the use class comprised of 1-6-unit 
residential structures should be assessed at 16 percent 
of market value. Residential structures with more than 
six units should be assessed at a third of market value. 

The sum of all the assessed values in a given taxing 
jurisdiction is that jurisdiction's tax base. The tax rate 
is determined by taking the amount of money its 
public officials want to raise from the property tax and 
dividing it by the base. 

These procedures make the property tax unlike any 
other tax, in that every individual's tax burden 
depends on the level of everyone else's. In other 
words, if someone does not pay the sales, income, or 
any other non-property tax which he owes, there is no 
direct impact on the amount of taxes due from anyone 
else. But if someone avoids property taxes because of a 
disproportionately low assessment, there is a direct 
impact on everyone else's tax bills; and this is true 
whether the unusually low assessment is due simply to 
unintentional error or to conscious scheming. A 
simple example might help clarify the situation: 



Suppose there are two homeowners in a jurisdiction, 
each with a home valued at $50,000. Each is properly 
assessed at 16 percent, or $8,000. Ignoring the 
multiplier, which is not relevant to this example, there 
will be a total assessed value of $16,000 in the 
jurisdiction. If the government wants 51,600 for its 
operations, the $1,600 is divided by $16,000, to obtain 
a tax rate of 10 percent, or one dollar per $100 of 
assessed value. Each owner — with half the total 
market value and half the assessed value — pays $800, 
or half the total tax bill. This is exactly as it should be. 

Now suppose the first owner is underassessed by 
one fourth. This means her assessment is $6,000, and 
the total assessed value is reduced to $14,000. In order 
for the jurisdiction to raise the same 51,600 from the 
property tax, the rate must jump to 11. 43 percent. The 
first owner, the one with the lower assessment, now 
pays only $686, while the other pays $914. The 
difference between the two tax bills is 33 percent 
($228). 

This example points up two important facts: 

1) Although the total tax bill depends on the 
amount of money requested by government officials, 
the proportion of that request paid by each property 
owner depend directly on the assessments of all other 
owners. 

2) It is relative assessments that matter, not the 
absolute levels of assessment. In our example, in other 
words, the second taxpayer was properly assessed 
according to law throughout, but he still paid much 
more than his fair share of the total taxes. If he were 
to obtain a 25 percent assessment reduction, matching 
the first taxpayer's reduction, both would be underas- 
sessed according to law; but the tax rate would go up, 
and each would again face identical bills of $800. 
Relative assessments, therefore, are of crucial impor- 
tance; and it is possible for an individual or an entire 
neighborhood to be overassessed, even if the assess- 
ments in question are at or below the legislated level. 

Distribution of the Property Tax Burden 

Because property taxes loom so large in the budgets 
of both owners and renters, it is important that 
assessment ratios be uniform among all citizens. 
Furthermore, the property tax will take on increased 
significance as changing federal and state policies 
force localities to depend more heavily on their own 
sources of revenue. There are at least four questions 
whose answers affect all urban residents, but most 
especially minorities and lower income households: 



73 



1. On average, is the real estate in minority 
neighborhoods assessed at higher ratios than real 
estate in other neighborhoods? 

2. Is lower valued real estate, which tends to be 
owned and occupied by lower income persons, 
assessed at higher ratios than more costly real 
estate? 

3. Are there large variations in assessment levels 
for similarly valued property, even for properties in 
the same neighborhood? 

4. Has there been in recent years a shift in the 
property tax burden from nonresidential types of 
property to residential types? 

In much of the work which has been done to date, 
the first two, and sometimes the first three, of these 
issues are combined. They are clearly related. Proper- 
ties of similar value tend to be clustered together, and 
many minority neighborhoods are characterized by 
relatively lower value property. If lower value proper- 
ty is overassessed, therefore, the burden will fall 
disproportionately on minorities. In addition, there 
are also low-income whites who own or rent lower 
valued property. They, too, suffer if such real estate is 
overassessed. 

The issue of generally erratic assessment levels is 
important because it makes reform efforts more 
difficult. Even if a neighborhood is, on average, 
overassessed compared with other neighborhoods, a 
strong reform coalition may not emerge if a significant 
proportion of property owners are relatively less 
overassessed than others. Such persons may simply 
feel that efforts to achieve reform are really not worth 
their while. Because almost all studies of assessment 
practices in all parts of the country, including Chica- 
go, show large variations in assessment ratios, this is 
not a minor problem. 

Let us now review some of the evidence concerning 
overassessment of lower valued and minority occupied 
real estate. Boston was one of the first targets of such 
research. A study published in 1965 looked at assess- 
ment ratios for 1 1 different classes of property in nine 
different neighborhoods, using sales from 1960 to 
1964. For the residential uses, there was a definite 
tendency for higher assessment ratios to be found in 
the power and minority neighborhoods. The same 
pattern also prevailed for many of the other uses 
(Oldman and Aaron, 1965). 

A later analysis explicitly introduced census-tract 
characteristics into a regression analysis of assessment 
ratios among approximately 100 of Boston's 155 
census tracts. The ratios on residential property 



tended to decrease as median family income increased. 
In other words, homes in higher income census tracts 
bore proportionately less than their share of the tax 
burden. Conversely, a disproportionately large share 
of the tax burden was carried by tracts with higher 
percentages of nonwhite residents, greater concentra- 
tions of deteriorated and dilapidated housing, or lower 
property values. Results were the same for both 1950 
and 1960, although not all the relationships were 
statistically significant in both years (Black, 1972). 

Another observer, looking at 19 neighborhoods in 
Norfolk, Virginia, found that "The four neighbor- 
hoods with the highest assessment-sales ratios were 
uniformly those with the lowest average property 
value and were among the five neighborhoods with the 
lowest average incomes in the city" (Pearson, 1979, p. 
1973). He also found great variation in assessment 
ratios within many of the 19 neighborhoods. 

Such findings as these are corroborated in a widely 
quoted report prepared for the U.S. Department of 
Housing and Urban Development in 1973. This study 
of 10 large U.S. cities found a general tendency for 
assessment ratios to be higher in so-called blighted and 
downward transitional neighborhoods than in upward 
transitional and stable neighborhoods. The results 
must be interpreted with caution, however, because 
the sample sizes were so small — only 10 or 11 
properties in each of the four neighborhoods in each 
city (U.S. HUD, 1973). 

Other researchers have found homes in black 
neighborhoods over assessed relative to those in white 
neighborhoods in Buffalo (Hezel and Paettenchwiller, 
1973, and Butterini, et al., 1980), Albany (Litwak and 
King, 1978), and Fort Worth (Hendon, 1968). 

Nonuniform Assessment in Cook County 

In the early 1970's a metropolitan community 
organization, the Citizens' Action Program (CAP), 
launched a major property tax campaign. Focusing 
initially on alleged underassessments of very large 
commercial and industrial properties, it soon shifted 
to single-family residences. A published study showed 
large overassessments in two of Chicago's older 
neighborhoods. One of these was predominantly 
black; the other was predominantly white, but near 
black areas and under some pressure to change 
(Moore, 1972; cf Berry and Bednarz, 1975, and 
Fuerst and Ditton, 1975). Unpublished parts of the 
same study found average assessments in four other 
neighborhoods at or a little below the countywide 



74 



average, with assessments in one neighborhood 
(Bridgeport) far below the county average. 

Partially in response to this pressure, the Cook 
County Assessor's office hired Real Estate Research 
Corporation and the governor appointed a special 
investigative task force. Both groups documented 
significant nonuniformity in assessment ratios for all 
classes of property, although neither examined the 
possible implications for lower income or minority 
neighborhoods (Real Estate Research Corporation, 
1971, and Kissel, 1972). These reports and continuing 
political controversy led to the introduction of a 
computer-assisted assessing system based on multiple 
regression analysis. The system was first used in the 
northeast one fourth (or quadrant) of the county, 
which was reassessed in 1976. It was subsequently 
employed in each of the other quadrants as they camp 
up for reassessment over the county's four-year 
reassessment cycle. Several analyses shortly after 
introduction of the new computer-assisted method 
produced evidence that this method continues to 
result in nonuniform assessment levels in Cook Coun- 
ty (Lyons, 1978; Commission to Study the Property 
Tax, 1978; Governor's Advisory Commission on 
Taxes, 1979; and Cook County Real Estate Tax Study 
Commission, 1979). 

Finally, in one of the most thorough and complete 
analysis of differential assessment ratios in black and 
white communities, Toni Hartrich Mahan (1979) 
found that assessment ratios in four black neighbor- 
hoods of Chicago and the inner ring of suburbs were 
higher than ratios in five white communities in the 
same geographic area. Partly as a result of this 
research, the Assessor's office commissioned a com- 
prehensive review of assessment methods in the 
county. That review, completed in January 1980, 
included numerous recommendations for increasing 
assessment uniformity, both within and among neigh- 
borhoods. I am now conducting research to determine 
whether there has been improvement, but results are 
not yet available. 

The Tax Shift from Nonresidential to Residential 
Property 

The fourth question concerns the shift of the 
property tax base away from nonresidential property, 
so that a larger portion of property taxes in many 
parts of the country is now borne by residential 
taxpayers than a decade ago. Kuttner and Kelston 
(1979) have recently documented such shifts in St. 
Louis, several cities in Ohio, New York City, Califor- 



nia, Idaho, Michigan, Wisconsin, and elsewhere. 
There are two primary reasons for this. First, residen- 
tial real estate prices have increased much more 
rapidly than have nonresidential prices during most of 
the last decade. Secondly, there has been a great 
proliferation of so-called incentives, or abatements, 
throughout the country. These are long-term (up to 30 
years) property tax exemptions granted to lure new 
commercial or industrial construction to an area. 
Evidence is mounting that they have little impact on 
location decisions, but they significantly reduce busi- 
ness contributions to the local tax base (cf Olson, 
1978; Bahl, 1980; Myers, 1981; and Curley, 1981). 

One consequence of these shifts, especially when 
coupled with increasing public awareness of the other 
property tax inequities which have been described 
above, is pressure for general tax limitation and so- 
called tax revolt. The public services cut as a result of 
successful revolts, of course, are disproportionately 
those on which lower income households tend to 
depend. 

A tax base shift such as this has not yet occurred in 
Chicago. One important reason is that the assessment 
ratio for 1-6-unit residential structures was reduced 
twice during the 1970's by the Cook County Board, 
without corresponding reductions for other classes of 
property. This has preserved the relative burdens of 
residential and nonresidential taxpayers in the county, 
but it has not removed any of the nonuniformities 
which have been mentioned. A second reason is that 
Cook County has not had, until quite recently, tax 
incentive programs of the type that have eroded other 
cities' nonresidential tax bases. Both of these condi- 
tions are changing, however. 

The spread between the ratios at which 1-6-unit 
residential properties and other properties are assessed 
has been increased to its constitutional maximum. The 
Assessor has recommended that the County Board 
reduce the ratio for both classes. This may create the 
illusion of relief for less sophisticated taxpayers; but it 
will not actually provide relief because the relative 
positions of the two property classes will not be 
altered. It will also tend to shift more of the tax 
burden onto residential structures with more than six 
units, many of which are occupied by minorities. In 
any case, the reduction, even if adopted, will not 
relieve nonuniformities within the small residential 
property class. 

Secondly, the Cook County Board passed (in 1977 
and 1980) two tax abatement ordinances, one for 
industrial property and the other for commercial. 



75 



Each permits a 60-percent property tax exemption 
over 13 years for new or substantially renovated 
facilities under certain very broadly defined condi- 
tions. Both can have significant negative impacts on 
the tax base, but the commercial abatement is poten- 
tially more damaging because there is so much more 
new construction to which it might be granted. The 
law states that it can be offered only in blighted areas, 
but its first proposed use is for Chicago's North Loop 
Hilton development. If the Assessor approves the City 
of Chicago's request, in effect declaring the North 
Loop "blighted," then a precedent will be set for every 
large hotel, office, or retail development in the future 
to claim a similar abatement. The result will be a 
definite shifting of the tax burden to residential 
taxpayers. This, of course, means an increase in the 
dollar amount of the tax burden differentials resulting 
from other assessment nonuniformities. 

Policy Options 

What can be done to improve the situation now, 
and to prevent similar problems from recurring in the 
future? Four broad policy areas suggest themselves: 

1. Promote better and more frequent citizen review of 
assessment performance. In order for this to be 
achieved, it is necessary that there be a strong state 
freedom of information law. The terms of such a law 
must provide that all records and data used in 
assessing, as well as the final assessments, be made 
available. Furthermore, data must be made available 
in any form used by the assessing jurisdiction, includ- 
ing those forms which can be directly read by 
computers. Such a law will facilitate examination of 
assessment performance, not only by those who now 
have access to computers but also by community and 
public interest groups, which are becoming increasing- 
ly sophisticated in the use of computers. 

The obvious benefit of this policy is that it entails no 
real government expenditures. Many groups in the 
Chicago area already have the knowledge and ability 
to analyze assessment ratios. Because community 
organizations have a natural interest in the assessment 
level of their constituents, simply making data avail- 
able to them will be a very important first step in 
creating the political climate in which good assess- 
ments are expected. 

2. Promote better internal procedures within assess- 
ment offices and more thorough state review of local 
assessment performance. In jurisdictions which utilize 
a computer, such as Cook County, this means the 
hiring or training of more staff who are qualified to 



make computer-assisted assessments. In any case, it 
means more careful internal reviews and quality 
checks prior to the release of assessments. 

Finally, state review agencies (in Illinois, the De- 
partment of Revenue) should begin conducting more 
detailed analyses of local assessment performance. 
One element of these analyses should be consideration 
of neighborhood variations in assessment ratios. The 
Department has recently begun to analyze price-relat- 
ed differentials to ascertain whether lower valued 
properties are overassessed — in general, they are — but 
it does not yet examine ratios for any geographic unit 
smaller than a township. Since there are only eight 
townships in the entire city of Chicago (and 30 in the 
rest of the county), township analyses cannot ade- 
quately deal with the problem of potential nonuni- 
formities in assessment ratios among neighborhoods. 
(For comparison, the Cook County Assessor's office 
subdivides the county into about 400 neighborhoods.) 

3. Extreme caution must be used in the consideration 
and granting of tax abatements. Over the long run, the 
goal should be to eliminate them entirely. This is not 
the place for a lengthy discussion of tax abatements 
and alternatives to them. However, I have suggested 
several alternatives in a paper prepared for the 1981 
Midwest Governor's Conference (Lyons, 1981). 

If abatements are not repealed, legislation should be 
promoted making it mandatory that each affected 
government body approve a tax abatement before that 
government's tax base can be affected. Under present 
law, school boards, park districts, library boards, 
hospital districts, and the like have no formal decision- 
making power with respect to the granting of abate- 
ments. Yet, if an abatement is granted, it reduces the 
revenue which can be raised by these jurisdictions at 
any given tax rate. The proposal would permit each 
jurisdiction to retain full control over its own tax base, 
thus curtailing some some of the pressure for reduc- 
tion of services, e.g., schools, in minority neighbor- 
hoods. There should also be more strict eligibility 
requirements for the granting of tax abatements, so 
that they are not given for development which would 
in all probably occur even without them. 

4. Even if the preceding recommendations are 
adopted in their entirety, there still will be households 
too poor to bear their property tax burden. For this 
reason, income-targeted relief measures should be 
expanded. In other words, all households, regardless 
of the age of the head or whether they own or rent, 
should be made eligible for circuit-breaker relief based 
on their incomes. Such relief can be granted as is 



76 



presently done, through provisions of the state income 
tax law. Because such relief is computed on the basis 
of property tax payments as a percentage of income, 
an important side-effect is that it will partially offset 
excessively high property tax payments due to overas- 
sessment. 

Bibliography 

Bahl, Roy. Sept. 1980. The Impact of Local Tax 
Policy on Urban Economic Development. An Ur- 
ban Consortium Information Bulletin. Washington: 
U.S. Dept. of Commerce. 

Berry, Brian J.L., and Robert S. Bednarz. Feb. 1975. 
"A Hedonic Model of Prices and Assessments for 
Single Family Homes: Does the Assessor Follow the 
Market or the Market Follow the Assessor?" Land 
Economics, 51, pp. 21—40. 

Black, David. 1972. "The Nature and Extent of 
Effective Property Tax Rate Variation Within the 
City of Boston," National Tax Journal, 25, 2, pp. 
203-9. 

Butterini, Frank, Hilda Comwell, Susan Dowd, and 
Robert Goch. Jan. 1980. Anatomy of Inequity: A 
Study of the Real Property Tax System in Buffalo, 
New York. Buffalo: New York Public Interest 
Research Group. 

Commission to Study the Property Tax. Jan. 1978. 
Final Report Submitted to the Assessor of Cook 
County. Chicago: Cook County Assessor's Office. 

Cook County Real Estate Tax Study Commission. 
May 21, 1979. Final Report.Chicago: Office of the 
President of the Cook County Board. 

Curley, John. Nov. 2, 1981. "Tax Breaks Aimed at 
Luring Firms Increasingly Attacked as a Givea- 
way," The Wall Street Journal, sec. 2, p. 25. 

Fuerst, James, and Andrew Ditton. Feb. 1975. "Re- 
ducing Property Taxes: An Evaluation of a Collec- 
tive Action," Land Economics, 51, 1, pp. 94—7. 

Governor's Advisory Commission on Taxes. Jan. 
1979. Report to the Governor. Springfield, 111.: 
Office of the Governor. 

Hartrich Mahan, Toni. 1979. Comparative Assess- 
ments of Selected Black and White Communities in 
Cook County, Illinois. Unpublished master's 
project. School of Urban Planning and Policy, 
University of Illinois at Chicago. (An earlier version 
of much of this research is available as Fred 
Bremer, Ed Dolan, Thelma Karson, Toni Hartrich 
Mahan, and Larry Wenderski, Relative Tax Bur- 
dens in Black and White Neighborhoods of Cook 



County (Chicago: School of Urban Planning and 
Policy, University of Illinois, April 24, 1979).) 

Hendon, William. 1968. "Discrimination Against 
Negro Homeowners in Property Tax Assessment," 
American Journal of Economics and Sociology, 17, 
2, pp. 125-32. 

Hezel, George, and Dunstan Haettenschwiller. 1973. 
Residential Property Assessments in the City of 
Buffalo. Buffalo: Erie County Public Interest Re- 
search Group. 

Illinois. 1981. "Local Government Tax and Expendi- 
ture Policies and the Regional Economy," in the 
Midwest Economy: Issues and Policy Series. 
Champaign, 111.: University of Illinois. 

Kissel, Richard. Oct. 1972. Report on the Assessment 
Practices in Cook County, 2 vols. Chicago: Illinois 
Dept. of Local Government Affairs (now the Dept. 
of Revenue). 

Kuttner, Robert, and David Kelston. Dec. 1979. The 
Shifting Property Tax Burden: The Untold Cause of 
the Tax Revolt. Public Policy Report 2. Washing- 
ton: Conference on Alternative State and Local 
Policies. 

Litwak, Mark, and Kyle King. 1978. Hit or Miss: 
Property Tax Assessment Practices in the City of 
Albany. New York: New York Public Interest 
Research Group. 

Lyons, Arthur. Aug. 1978. Assessment Ratios for 
Townships and Selected Neighborhoods in Cook 
County, Illinois: A Study in Nonuniformity. Chica- 
go: School of Urban Planning and Policy, Universi- 
ty of Illinois. 

Michael, Richard, and Richard Almy. Jan. 8, 1980. A 
Report to the Assessor on Assessment Practices & 
Procedures for Residential Properties in Cook 
County. Chicago: Office of the Cook County 
Assessor. 

Moore, Thomas J. Oct. 15, 1972. "Beverly, South 
Shore Homes Highly Overassessed, CAP Finds," 
Chicago Sun-Times, p. 3. 

Myers, Will S. March 1981. Regional Growth: Inter- 
state Tax Competition. U.S. Advisory Commission 
on Intergovern mental Relations Report A-76. 
Washington: U.S. Government Printing Office. 

Oldman, Oliver, and Henry Aaron. 1965. "Assess- 
ment-Sales Ratios Under the Boston Property Tax," 
National Tax Journal, 18, 1, pp. 36-49. 

Olson, Susan. April 1978. An Evaluation of Tax 
Incentives as a Means to Encourage Redevelop- 
ment. Cleveland: City Planning Commission. 



77 



Pearson, Thomas. 1979. "Assessment Ratios and U.S. Dept. of Housing and Urban Development (U.S. 
Property Tax Burdens in Norfolk, Virginia. 1974- HUD). Jan. 1973. A Study of Property Taxes and 

1975," American Real Estate and Urban Economics Urban Blight. Prepared by Arthur D. Little, Inc. 

Association Journal, 7, 2, pp. 190-230. Washington: U.S. Government Printing Office. 

Real Estate Research Corporation. 1971. Reconnais- 
sance Study of the Assessor of Cook County. 
Chicago. 



78 



Local Enforcers 



Promoting and Preserving Racial 
Residential Diversity: The Park Forest 
Case 

by Donald L. DeMarco, Assistant Village Manager, 
Park Forest 

Park Forest, Illinois, is a leader in integration 
among American cities, but the town, "a planned 
community," did not come off the drawing board with 
this goal in mind. Nevertheless, the promotion and 
preservation of neighborhoods that equally attract 
homeseekers from all racial groups is not something 
that just happens; it is planned and race-consciously 
worked at. Park Forest has been planning and 
working at it for years. 

The success of Park Forest probably cannot be 
replicated. Moreover, other American communities, 
each unique, probably would and should not try to 
follow Park Forest's all-too-small shadow out of place 
and out of time. In Park Forest's experiences, how- 
ever, are important lessons to be learned about how to 
promote stable racial diversity. Of no less importance 
are reasons why such a purpose and goal ought to be 
pursued. 

According to the 1980 census, blacks make up 12.1 
percent of the Chicago south suburban village of 
26,222. Other minorities, Asians and Hispanics, com- 
prise 5.6 percent. With at large elections, no political 
parties or slating, and no racially identifiable neigh- 
borhoods. Park Forest's Village President is Ronald 
Bean, a black man, aged 38, a lawyer and the 
executive director of the Illinois Environmental Facili- 
ties Financing Authority. Of Park Forest's six trust- 



ees, who along with Bean, comprise the village 
governing body, one trustee, James Reed, a retired 
Army major and a school administrator in the 
Chicago system, is also black. The village board is 28.6 
percent black. This twice-named All America City is 
the only predominantly white Chicagoland municipal- 
ity to have a black mayor. 

As Ron Bean has said, "Park Foresters are capable 
of looking beyond the issue of race or national origin." 
This is possible not because Park Foresters are 
individually extraordinarily liberal. Park Forest is a 
suburban bedroom community populated with voters 
(and non-voters) whose support of conservative eco- 
nomic policies and conservative national political 
figures mirrors many other Chicagoland suburbs; their 
incomes are about the suburban median and their 
steadily increasing housing value appreciation still 
leaves their housing stock less expensive than average. 
It is possible because Park Forest's past leaders 
desired to avoid the costs of racial discord and some 
few wished to enjoy living, and continuing to live, in a 
culturally enriched environment, one which was ra- 
cially inclusionary. Park Foresters, from the begin- 
ning, have not wished idly. 

History of the Park Forest Experience 

Park Foresters, the organization men (and women) 
of William H. Whyte's 1950's best seller. The Organi- 
zation Man. organized. They organized to make their 
wishes reality, to shape their own destiny, to win the 
award for twenty-twenty foresight, rather than hind- 
sight, and to make their community the prototype for 
American society. In terms of gaining nationwide or 



79 



Chicagowide followership, Park Foresters have yet to 
achieve marked success. 

Planning for the village began in 1945 by American 
Community Builders (ACB), whose principal was 
Philip M. Klutznick, commissioner of the Public 
Housing Administration during World War II. Con- 
struction of commercial buildings and town houses 
began in 1948; Park Forest was incorporated on 
February 1, 1949, only six months after its first move- 
ins, and single-family home construction commenced 
in 1951, with most buyers being "graduates" of the 
rental town houses. 

As demand for housing was great, the developers 
could choose from a pool of well-qualified renters and 
buyers; there were no racial minority group members 
among them in those early days. 

Racial unrest in Cicero in 1951 brought ACB its 
first inquiries from blacks regarding rental housing, 
and in June of that year, Thomas Colgan, Park Forest 
resident and American Friends Service Committee 
affiliate, called upon the village board of trustees to 
form a human relations commission that would study 
racial discrimination in the town. 

"Ethical and legal principles of treatment for all 
citizens" were cited in the July 24, 1951 resolution by 
which the board authorized creation of the village's 
Commission on Human Relations (CHR). Henry X. 
Dietch, then village president and now a Cook County 
Circuit Court associate judge who still resides in the 
village, appointed its membership on August 21, and 
the new body had its first meeting on September 14 of 
that year. 

"Inter-faith as well as interracial cooperation" was 
an early CHR concern, but possible future housing 
integration was seen as a dominant issue in the spring 
of 1952. An ACB official had publicly stated that it 
was his desire to build houses for anyone, but that 
"Negroes prefer to live with other Negroes, and Park 
Forest will not change that situation." 

Klutznick asked the Commission in October of 
1952 to "ascertain the sentiments of leaders of 
prominent organizations in the community before 
ACB decides whether or not it can shoulder the risk 
involved in accepting (Negro) applications." The 
Commission responded that "it is not our role to act 
as a poll-taking organization for ACB. . . .the com- 
mission as a Village organization is not in a position to 
take an activist position in the matter of acceptance of 
Negroes as tenants, but it is rather our position to 
insure that no incidents occur when the first move-in 



occurs." It would, it said, "work toward democratic 
conditions for residence in the Village of Park Forest." 

Yet nothing changed until early in 1958 when 
President Robert Dinerstein reconvened the CHR and 
Harry Teshima, a Nisei resident who had not himself 
received much ACB enthusiasm when he moved to the 
village in the early '50's, began working with friends, 
the National Council of Christians and Jews and 
American Friends Service Committee, to interest 
black families in seeking Park Forest housing. We 
would, years later, be honored by the Commission on 
Human Relations for this pioneer work. 

On June 25, 1959, the Commission met with 
Charles Wilson, the first black definitely interested in 
purchasing a home in Park Forest. Restating its 
position of "non-activism" and "rights observance," 
the CHR decided on a plan that would include calls 
upon neighbors of black move-ins to provide accurate 
information and contacts with the blacks to let them 
know of community resources and support. 

The plan was activated in December of that year 
when Wilson moved into his Wilshire Street home. 
Many residents, both pro and con integration, spoke 
out at the village board meeting of January 12, 1960, 
but the village held firm to its posture in support of 
law and order. No incidents occurred. 

The Wilsons were transferred from the village in 
1962, to be succeeded by Terry Robbins, employee of 
a chemical firm which had other employees residing in 
Park Forest. Encountering resistance from the town 
house rental management, Robbins bought a home on 
Blackhawk Drive. 

Harry Teshima had encouraged Robbins' purchase 
and home buying by several other black families soon 
afterward. Their purchases were mainly VA and FHA 
foreclosures covered by the federal executive order 
prohibiting discrimination against minorities. Teshima 
also discouraged black home-seekers from selecting 
houses close to those owned by other blacks, an early 
and far-sighted "anti-clustering" move. 

In the early 1960's, Dinestein was chairing the CHR 
as many town house units went from rental status in 
reorganization as federally-insured co-operatives, with 
black families being accepted to membership. By the 
end of May, 1964, the 12th black family had become 
Park Forest residents; by July of 1965 there were 33 
black families, spread throughout the village and in an 
almost even split between single-family home owner- 
ship and multi-family unit residence. 

The village's official stand was to neither encourage 
nor discourage minority move-ins. On the advice of 



80 



human relations experts, village President Bernard 
Cunningham wrote to all Park Forest real estate 
brokers in October of 1965, encouraging them to give 
special care in the sale of homes in close proximity to 
black-occupied houses, and at the same time asked 
clergymen to play supportive roles by welcoming new 
black church members and calming others who need 
reassurance. This they were quick to do. 

By the end of that year, 1.25 pecent of co-operatives 
were occupied by black families, .25 percent of the 
village's single-family homes were under black owner- 
ship and one-half of one percent of Park Forest's total 
population was black. Move-ins and move-outs were 
tracked systematically into 1968: in June of that year 
there were 1 10 black families in the village, and 144 by 
the end of September; 56 in houses, 80 in co-ops and 
eight in rentals. Clustering was to be avoided, accord- 
ing to a memo at that time from the village to area real 
estate workers. 

During the early part of 1967 many groups began to 
speak out in favor of adoption of fair housing 
legislation and the village considered its action later 
that year. Trustee Mayer Singerman proposed adop- 
tion of such an ordinance for its symbolic as well as 
practical value. The Commission on Human Relations 
recommended a comprehensive fair housing ordinance 
in November. It was passed by the Board of Trustees 
on January 29, 1968. The CHR was given the role of 
enforcement. 

Thus Park Forest's fair housing ordinance predates 
federal fair housing legislation, the Civil Rights Act of 
1968, Title VIII, passed later that year after the 
assassination of Dr. Martin Luther King, Jr. 

Through 1969, the village continued to collect data 
on its black residency, this being seen as an appropri- 
ate way of monitoring compliance with Park Forest 
policy and law. No more "reassurance" visits were 
being made since they no longer seemed warranted, 
and soon it was decided that information gathering on 
residents might be considered an infringement of their 
rights or dignity. This practice was also discontinued 
and black move-ins were treated without any special 
attention. The 1970 census showed Park Forest's 
black population to be 2.4 percent. 

Meanwhile, increasing tension was building con- 
cerning construction of low-income housing in Beacon 
Hill-Forest Heights, bringing the matter of class as 
well as racial integration into Park Forest Elementary 
School District 163 and Rich Township High School 
District 227. The CHR recommended and the village 
board adopted a resolution of support to District 163 



as it voluntarily desegregated all its schools through a 
grade reorganization plan that went into operation 
without incident in the fall of 1972. 

That year, the commission held the first of its three 
"Responsible Housing Practice Days," had an initial 
meeting with the local realty community to discuss a 
new term "racial steering" and its implications, and 
encouraged the village to become a corporate member 
of National Neighbors, an organization of communi- 
ties and neighborhood groups dedicated to the avoid- 
ance of segregation and the promotion of functional 
integration. 

In April of 1973, village President Ralph Johnson 
was besieged with distressed calls from residents of 
West Lincolnwood, at the north end of the village, 
where four adjacent houses were sold to black families 
within a four-month period. He responded by initiat- 
ing an investigation regarding illegal racial steering 
and panic peddling — which uncovered nothing action- 
able — and called for cooperation of both homeowners 
and the real estate community to assure the continued 
free flow of real property. This mini-cluster has not 
increased in size since that time. 

The next month, the Board of Trustees called a 
special rules committee meeting to hear from experts 
regarding integration maintenance and learned the 
importance of housing counseling, affirmative market- 
ing and overall maintenance of all physical property in 
the village. Within a few days, a board committee had 
enough integration maintenance recommendations to 
urge passage of a new ordinance that would reaffirm 
open housing, specifically prohibit racial steering and 
create a fair housing review board to hear complaints. 
The proposal also called for testing or auditing of real 
estate brokers and counseling of homeseekers. This 
counseling must involve exposure to housing options 
in the whole area and must be done whether or not 
neighboring municipalities cared to cooperate just yet. 
And the counseling must never limit options, only 
expand them. 

The ordinance ultimately provided for all the above 
except counseling; that matter plus the problem of 
aging and abandoned housing went for study to the 
village's ad hoc housing corporation committee, which 
recommended establishment of a non-profit housing 
corporation which would be independent of the 
village, yet have its support. Park Forest Area 
Housing Council was thus created in mid- 1974 and 
became, a year later, the Far South Suburban Housing 
Service (FSSHS). 



81 



When FSSHS began devoting most all of its 
resources to remunerative housing rehabilitation in a 
neighboring town which has a relative deficiency of 
demand for housing by minorities, the village turned 
to the South Suburban Housing Center (SSHC), an 
organization that the village had not birthed. but one 
that it had fostered. South Suburban League of 
Women Voters' members had organized SSHC to 
foster stable racial diversity in the whole of the 
housing market of which Park Forest is a part, an area 
housing 700,000 people. 

The village has spent substantial tax monies, often 
via contract, for the collection of race/residence data 
for "the greater Park Forest area," for attitudinal 
research, for auditing (or investigating) south subur- 
ban rental and sale real estate practices, for compli- 
ance actions, for affirmative marketing, training and 
aides, and public relations, i.e., doing good and taking 
credit for it. 

Fair Housing Presentation Program 

Underlying the village's policy on public relations 
are several interwoven beliefs (supported by academics 
such as Reynolds Farley of the University of Michi- 
gan, Robert Lake of Rutger's, and Leonard Heumann 
of the University of Illinois); viz, it is vital to: 

1. Make whites aware that other whites are not 
nearly as prejudiced as they are thought to be, 
especially in Park Forest, but also in general. 

2. Make whites aware that blacks of equal status 
(education, occupation, income, values) will be or 
are their neighbors in stably integrated neighbor- 
hoods (while acknowledging that the same is not 
necessarily true in areas of rapid racial transition or 
resegregation: a situation which should not be 
equated or confused with integration). 

3. Make blacks aware that whites (including those 
in the increasingly fewer virtually all-white 
towns. . .none left in the south suburbs) are not 
nearly as hostile to neighborhood integration as 
they may think. (This is especially true in the 
suburbs where whites are relatively more "status 
secure.") Point out the relative actual danger to 
blacks of living in the typical predominantly black 
neighborhood and the relative absence of any 
violence impacting on blacks in predominantly 
white neighborhoods (despite the fact that the news 
media focuses on the occasional, atypical, negative 
experience). 

4. Make whites, blacks and others aware that it is 
illegal to practice housing discrimination and that it 



can be costly. Point out that much discrimination 
takes place without nefarious intent or hostility to 
any person, race, or geographic area community or 
neighborhood, but that the discriminatory (segrega- 
tory) result is no less pernicious. 

5. Make whites, blacks and others aware that real 
integration (not mere desegregation or rapid racial 
transition) brings real economic benefits, especially 
property value appreciation. 

6. Make minorities, non-minorities and system 
controllers including pertinent institutions of all 
levels of government and housing marketers and 
their supporting structures aware of the municipal 
interest and commitment to promoting unitary 
marketing practices everywhere and creating and 
maintaining racially inclusive, non-racially identifi- 
able neighborhoods and markets. Press higher levels 
of government to advance on the mutually depen- 
dent purposes of fair housing; i.e.. (1) equal access 
for minorities; and (2) integrated and balanced 
living patterns. We cannot really have one without 
the other; they are complementary. 

7. Make an effort to get favorable, non-racial 
publicity. Avoid a high racial (controversial) profile, 
even if it means foregoing credit for success in 
progressive, or socially responsible race relations. 
Such attention tends to be misread, misinterpreted 
and diminishes demand for housing from non-mi- 
norities. (This does not mean that we fail to 
cooperate with citizens or the media when asked 
directly for information or explanations. To do so 
would be to invite suspicion and draw negative press 
on a racial theme — far worse than "the praise with 
the unintended partially negative probable conse- 
quences.") 

8. Seek favorable racially oriented publicity for 
neighborhoods and towns that are not generally 
associated with minority activity or residence so as 
to stimulate underrepresented minority housing 
traffic and demand. 

Fair housing/integration promotion and preserva- 
tion programs in Park Forest include: 

A. Fair housing audits for housing marketers. 

B. Affirmative marketing seminars for housing 
marketer. 

C. Homeseeker counseling. 

D. Residential location consultant services. 

E. Public relations support — focusing attention on 
the All-America City, its achievements, its citizens, 
its activities, and its plans to keep it all going strong. 



82 



Oversight and Assessment 

Most major policy decisions made by the village 
board and most administrative decisions and appoint- 
ments made by the village manager and his stafF are 
made after accessing the impact on the housing 
market; i.e., whether the various alternatives will 
foster stable, diverse race-residence patterns and social 
integration or not. Some decisions, such as those 
related to the siting and upkeep of Park Forest's 
assisted or subsidized housing for seniors and families, 
are obvious issues for attention. Other decisions 
require more penetrating vision. 

The staff person who is responsible for raising this 
question and providing information and some insight 
is an assistant village manager. This is a position on 
the municipal organization chart which is administra- 
tively superior to police chief, fire chief, and public 
works director. The village is equally concerned about 
affirmative action for equal opportunity in employ- 
ment and for affirmative action for equal opportunity 
in education, even if it means busing. Its housing 
concerns are not isolated. 

In 1981, Park Forest stands as an integrated 
community, one comprised of people of different 
races, ethnic groups, religious and economic means — 
although very predominantly middle income and 
mainstream. The diverse population interacts, cooper- 
ates, and competes in relative harmony. There is no 
territory or sphere of interest or influence that is not 
accessible to persons from any group. The town's 
lofty — some might say inflated — view of itself pro- 
vides the target and inspiration for continuing to meet 
the challenge. In the south suburban area, other towns 
(Park Forest South, Hazel Crest, Chicago Heights, 
Country Club Hills, Glenwood, Matteson, Home- 
wood, Calumet Park and the thirty-five member South 
Suburban Mayors and Managers Association) are at 
various stages of recognizing and acting on their 
enlightened self-interests — economic and social — in 
integration. Other allies are lightly sprinkled about 
other sections of Chicagoland and throughout the 
country. Some of them are brought together by the 
Oak Park Exchange Congress, National Neighbor- 
hoods and other coalition builders. 

But, alas, all is not so really rosy. The gods have 
really not yet ordained success for Park Forest and the 
relatively few, the atypical, integrated towns. Prob- 
lems abound. The real estate industry, especially the 
National Association of Realtors (NAR) 700,000 
strong, presents a major obstacle. The federal govern- 
ment, HUD, et al., has been dogged in its refusal to 



Hve up to the Civil Rights Act of 1968, Title VIII 
mandate to act affirmatively to effect the purposes of 
that fair housing law. 

Senator Walter Mondale, in sponsoring the Fair 
Housing Act, said that among its purposes was 
replacement of racially identifiable housing markets 
"by truly integrated and balanced living patterns." By 
and large across the nation, we have not seen that goal 
realized or even advanced upon except in certain 
atypical cases and at a very considerable burden to 
local officials and taxpayers. Instead, we have had the 
other great purpose of fair housing legislation, i.e., 
"freedom of choice," become the slogan for segrega- 
tion, and resegregation, ethnic purity, separate and 
unequal, business as usual, American apartheid. 
"Freedom of choice" has become the code phrase that 
serves as once did "State Rights." It has been used in 
an effective real estate industry propaganda campaign 
against efforts to promote and maintain integrated 
housing markets by affirmative marketing. 

It is not enough to have civil rights laws that would 
allow an individual to live in any neighborhood if the 
housing markets' segregatory ills are not remedied. 
Processing individual complaints of discrimination has 
not proved to be the answer. The NAR-HUD axis has 
successfully fought off the institution of practical 
initiatives to promote and maintain residential racial 
diversity. Sometimes they claim that such initiatives 
would restrict the rights of persons, including minori- 
ties, who desire to continue to choose to live in racially 
homogenous enclaves and into opposing specific subsi- 
dies of segregatory patterns. 

From time to time, some black opinion leaders — 
real estate brokers, politicians and others — have 
voiced support and given credence to the NAR-HUD 
resistence, preferring more black housing to integra- 
tion. The National League of Cities (NLC) and other 
municipal lobbying groups that assume a public stance 
favoring fair housing are very skittish about integra- 
tion and tend to equate fair housing with housing 
minority and low income people. 

The state of Illinois finally in 1980 created a Human 
Rights Department which includes provision for fair 
housing enforcement. But, the state's posture is not 
more affirmative than is Washington's. 

When the Northeastern Illinois Planning Commis- 
sion (NIC) was pushed into favoring "balanced 
patterns of settlement and delivery of services" 
throughout the region and into opposing specific 
subsidies of segregatory patterns, NIPC got savagely 
attacked, accused of pretensions about metropolitan 



83 



dictatorship and usurping local control. NIPC's exis- 
tence was threatened; its budget was slashed. The 
lesson has been painfully learned. A retreat, a soften- 
ing was required. 

Across Chicagoland and the nation, the pervasive 
dual housing market continues to send whites and 
blacks and other minorities to live apart and in 
suspicion of one another. If the Park Forest and Park 
Forest-like realities, achieved in the face of the 
segregatory and resegregatory winds, are to endure, 
they must expand and become many, if not typical. 
Otherwise, their precarious present may well be 
merged with the segregatory reality of the larger 
society. 

Supporting the enforcement of laws to diminish and 
stop unfair housing practices is not enough. Govern- 
ment, financial institutions, employers, housing devel- 
opers and marketers, educators and school decision- 
makers, and the media must value and move toward 



the lawful, if not already mandated, choice of integra- 
tion. The civil rights-intergroup relations community 
needs to get in front of this movement. Support from 
such quarters has not been strong. Anti-melting pot 
and pro racial, ethnic, and cultural identity sentiment 
abounds. 

In conclusion, the Park Forest model cannot be 
viewed as a melting pot filled with dull, gray, 
homogenized human gruel. It cannot be correctly 
viewed as pure cultural pluralism (unless there is a 
suburban culture) in the sense of a meal cooked with 
many different pots, the meat separate from the 
potatoes, separate from the vegetables. The Park 
Forest model is like a stew. The meat, potatoes, 
carrots and peas swim together and are flavored by 
one another. 

The integratory stew tastes good to those fortunate 
enough to partake, but the injection of poison — of 
American apartheid — always threatens. 



84 



Racial Diversity: A Model for American 
Communities 

by Roberta Raymond, Oak Park Housing Center 

Segregation, Integration, Resegregation; Inevitable 
Sequence or Community Choice? 

Racially diverse communities are an "endangered 
species." Surrounded by closed communities, they 
must combat the full range of institutional forces 
which tend to operate against their survival. If this 
nation is to become one nation, which has put the evils 
of segregation forever behind it, it is essential that a 
firm commitment to support racially diverse neighbor- 
hoods be set as the highest federal priority. 

The tone of race relations in the United States has 
been established and perpetuated by patterns of 
housing segregation which have come to be accepted 
as "normal." The seriousness of the social problem of 
housing segregation goes far beyond a simple determi- 
nation of where people live. It bears on the entire 
existence of blacks and whites in our society. In 
Negroes in Cities, Alma F. and Karl F. Taeuber point 
out: 

Residential segregation occupies a key position in patterns of 
race relations in the urban United States. It not only inhibits 
the development of informal, neighborly relations between 
whites and Negroes, but ensures the segregation of a variety 
of public and private facilities. The clientele of schools, 
hospitals, libraries, parks and stores is determined in large 
part by the racial composition of the neighborhood in which 
they are located. 

Chicago has often been called the most segregated 
city in the nation. Its pattern of segregation developed 
after the first large-scale migration of blacks to the city 
in the early 1900's and continues to the present. 
Remforced in 1917 by the Chicago Real Estate 
Board's basic policy that dictated ". . .each block 
shall be filled solid and that further expansion shall be 
confined to contiguous blocks," housing segregation 
has become the rule, with racially diverse neighbor- 
hoods the exception. 

The lack of successful models for long-term racial 
diversity has led most Chicagoans and their surround- 
ing suburbanites to believe that movement of blacks 
into their neighborhoods will initiate an irreversible 
process in which the neighborhood begins as mostly or 
all white, achieves a temporary condition of "integra- 
tion," and then "resegregates" to a mostly or all black 
neighborhood. 

Many Chicago metropolitan area suburbs passed 
fair housing legislation in the late 1960's, coinciding 



with the passage of the federal Civil Rights Act of 
1968. Such legislation followed national and local 
efforts to "open" communities in an attempt to 
coalesce a society viewed as divided by the Kerner 
Commission after the riots and disorders of the late 
1960's. 

There are still many opportunities for Americans to 
live in segregated neighborhoods; there are few oppor- 
tunities to live in diverse ones. If the Chicago 
metropolitan area is to achieve open and free housing 
choice, the few existing models for diversity must be 
nurtured. They are fragile and prey to attacks from 
many segments of society. They offer, furthermore, 
the only examples from which we can learn what 
works and what doesn't work. They are our laborato- 
ries for a social experiment of great value to the 
nation. From them will come the answers to questions 
asked by sociologists, demographers, psychologists 
and urbanologists who theoretically have studied 
black and white division, and what some have 
concluded is a growing gap between these racial 
groups. 

This paper will focus on one suburban community 
that has developed unique approaches to encouraging 
long-term racial diversity in its housing market. That 
community is Oak Park, Illinois, and the author is the 
director of the Oak Park Housing Center, a volunteer 
group, which has existed since 1972, directing its 
attention to Oak Park's housing supply and demand, 
while at the same time being acutely aware of the 
broader problem of Chicago metropolitan-wide hous- 
ing patterns and the effect of federal and state policies 
upon these housing patterns. 

In viewing Oak Park as a model for racial diversity, 
the author acknowledges that Oak Park has not 
reached perfection, nor does it exist without continu- 
ing problems and challenges. Nevertheless, Oak Park 
has taken a courageous step in openly discussing the 
essential issue confronting this nation: whether whites, 
blacks and other minority groups can live together, as 
neighbors in every sense of the word, and gain 
experiences which will bring us closer to a society 
which offers equal opportuniy in education, employ- 
ment, cultural experiences and other areas of life. 

Oak Park's Commitment to Racial Diversity 

To understand Oak Park's present position vis-a-vis 
racial diversity, one must first examine how the village 
anticipated its needs almost twenty years ago, in the 
context of its sensitive geographic location. The 
Village of Oak Park, Illinois, covers 4.7 square miles 



85 



on the western border of Chicago, with a population of 
54,887. Self-contained, with no room for expansion, 
the village is bordered on the south by Cicero and 
Berwyn, on the west by Forest Park and River Forest, 
and on the north and east by Chicago. Of greatest 
significance to Oak Park in any discussion of the 
village's attempts to achieve racial diversity, is Chica- 
go's Austin district on the village's eastern boundary. 
Directly in the path of Chicago's quickly expanding 
strip of black residency, Austin in the 60's was to 
undergo racial change of the type most often witnessed 
in Chicago. Its transition from white to black was 
accompanied by fear, harassment and panic-peddling 
by realtors; the sudden "writing ofT' of the schools by 
the Chicago Board of Education; and inadequate 
provision of municipal services to meet the popula- 
tion's increase and changes. But, what distinguished 
Oak Park from the many communities throughout the 
nation which have been confronted with the challenge 
of racial change is that Oak Park initiated efforts to 
welcome all races to the community long before the 
path of block-by-block change reached the village's 
eastern border. 

Although a small group of blacks had resided in 
Oak Park since shortly after the Civil War, their 
numbers had decreased due to attrition, and they had 
not been replaced by other blacks. In 1963 a citizen 
group formed to lobby for open housing legislation. 
The Oak Park-River Forest Citizens Committee for 
Human Rights sponsored many events to attract black 
residents to Oak Park and exerted pressure on real 
estate offices by a sustained campaign of public 
marches and demonstrations and on the village 
government via petitions and public hearings. At 
about the same time, the Oak Park Board of Trustees 
appointed an official Community Relations Commis- 
sion to monitor housing practices. In May, 1968, the 
Commission recommended passage of a strong fair 
housing ordinance. Actually passed before the federal 
government passed its fair housing legislation, that 
ordinance set the scene for creation of a Community 
Relations Department, one of the first in the state, to 
be responsible for the daily enforcement of the 
ordinance. 

An early priority was to inform the local real estate 
industry of its rights and responsibilities as related to 
the ordinance, and in a broader sense, to communicate 
to realtors that Oak Park's future was their future. 
Both the public and private sectors encouraged the use 
of local realtors, in an attempt to prevent the influx of 
outsides who might accelerate sales through question- 



able practices. Oak Park and River Forest are covered 
by their own real estate board, with offices located 
within the villages, and staff tending to reside in them. 
This immediately sets Oak Park apart from most other 
Chicago suburban areas, whose real estate boards 
cover large geographic areas and whose members 
often have little personal loyalty to an individual 
community. Members of the Oak Park-River Forest 
Board of Realtors were, in some cases, third genera- 
tion members of families who had established offices 
and had major investments in Oak Park. They were 
not in the business for a "quick buck." Education of 
the real estate industry became an important activity 
of the Community Relations Department and the 
private sector, as represented first by the Citizens 
Committee and later by the Oak Park Housing Center. 
Seminars and tours were held which emphasized 
affirmative marketing principles and tried to stimulate 
enthusiasm for the "new Oak Park." The majority of 
realtors stayed in the community and broadened their 
staffs to include new, young residents who expressed 
the enthusiasm and were able to sell integration as a 
positive value. In cases where dubious practices were 
revealed, investigation and the filing of complaints 
also were a means of educating the real estate 
industry. 

Following a course of slow integration, blacks 
moved into the village in a dispersed pattern, during 
the period between 1963 and 1971. By 1971 there were 
black families living in all ten elementary school 
districts, with approximately sixty-five housing units 
occupied by blacks. 

However, during the late 60's and the early 70's, the 
rapid racial change which had been occurring in 
Austin was to have a dramatic effect upon Oak Park, 
intensifying the village's commitment to diversity, 
while forcing a recognition of the possibility of 
resegregation. 

Predictions — A Call to Action 

If Oak Park had been proceeding along its slow but 
positive path toward racial diversity as a community 
buffered from Chicago by several other white or 
integrated communities, its actions of the early 1970's 
would have been quite different. Such is not the case, 
however, and its geographic position has prodded Oak 
Park, with the help of its creative populace, to develop 
a new set of approaches. 

The comment, "If Oak Park can't make it, no 
suburb can," was often heard during that time and 
since. There were frequent references to the village's 



86 



solid image as an upper middle class, historically 
significant, architecturally rich, and relatively enlight- 
ened, established suburb. Nevertheless, fear and panic 
had dominated and overwhelmed a number of similar 
Chicago neighborhoods, including Austin. For, by 
1971, racial change in Austin had been dramatic and 
rapid, encompassing the area as far west as Austin 
Boulevard, which marks the boundary between Chica- 
go and Oak Park. Many white families living in Austin 
at that time had previously moved from other Chicago 
south and west side neighborhoods and now chose 
Oak Park as the next place to emigrate. They brought 
with them their experience and knowledge of the 
racial change process. 

A comparison of the Austin and Oak Park experi- 
ences has been well documented in the book. The Oak 
Park Strategy, by Carole Goodwin, which notes: 

Whatever the differences between Austin and Oak Park, 
white residents eventually came to share the same fear; that 
Chicago's massive black ghetto would continue the seeming- 
ly inexorable expansion that had caused one after another 
west side neighborhood to change from all white to all black, 
and that the same fate would befall Austin and Oak Park. 

The period of the late 60's and the early 1970's was 
also a time for Chicago's resident demographers to 
take a look at Oak Park and make their predictions, 
based on past patterns and census data. Essentially, 
these predictions agreed in forecasting that Oak Park 
would be 10 percent black by 1975 and 25 percent by 
1980. Factors that would contribute to this change 
were the rapid transit lines from downtown Chicago 
which ran through the predominantly black west side 
to Oak Park; the fact that, historically, black areas 
expand into contiguous white ones and seldom "leap- 
frog" from a black over a white one to a distant white 
one; and that the liberal attitude of groups in Oak 
Park would contribute to the influx. Oak Park was 
seen as a "prime target" for black expansion for 
another reason, which was that it contained a high 
percentage of apartment units, well within the finan- 
cial reach of many west side Chicago blacks. With 
almost half of Oak Park's housing stock in rental 
housing and those units concentrated next to Austin 
and in a corridor between the rapid transit lines, it was 
not unreasonable to expect that black movement 
would quickly occur in the rental units as it had in 
many Chicago neighborhoods. 

Oak Park's reactions to these predictions were 
varied. There was, although to a limited extent, white 
fear and flight. But, more importantly, there was a 



perceived challenge that Oak Parkers seized as an 
opportunity for creativity. One of the critical differ- 
ences between the established "Chicago pattern" and 
its citizen reaction and Oak Park's new way of dealing 
with change was that Oak Park's government was 
autonomous, smaller, more accessible to citizen input, 
and willing to take on a seemingly impossible task. 
First and foremost, the government set itself apart 
from all others by passing in 1973 an official policy 
statement, "Maintaining Diversity in Oak Park," 
which stated in part: 

. . .Housing patterns in large metropolitan areas of this 
country have worked against equality and diversity. Block- 
by-block racial change has fostered inequality by creating 
"de facto" segregation. Efforts to achieve diversity are 
nullified by the re-segregation of neighborhoods from all 
white to all black. We, individually, and as a community, 
have worked long and hard on behalf of open housing in 
Oak Park: we must not succumb to Big-City-style residential 
patterns. 

What took place in Oak Park in the significant 
period from 1970 to 1980 has been documented 
perhaps more than any other period in the communi- 
ty's existence. It has been the subject of a book, 
chapters in a number of texts, a full-length film, 
numerous television and radio shows, hundreds of 
magazine and newspaper articles, and innumerable 
student research papers. The media fascination with 
Oak Park has been a "mixed blessing," valuable in 
terms of providing a data source for other communi- 
ties interested in pursuing similar goals, but at times 
overemphasizing the precarious nature of racial diver- 
sity. 

Community Intervention in Racial Change 

The government of Oak Park recognized that 
without both public and private sector intervention in 
the process of population change. Oak Park would 
probably experience a steady change in its population 
from white to black, thereby losing its opportunity for 
integration. A study by the International City Man- 
agement Association stated: "The village realized that 
families, investors, and businesses were all capable of 
making decisions which could either accelerate or 
impede the feared process of decline." What was 
unique about Oak Park's reaction to the challenge was 
the willingness to openly discuss the issue both within 
and outside the community. Prior to that time, most 
communities reacted with panic, embarrassment, at- 
tempts to "hold the line" by keeping blacks in one 
area, the general feeling that an integrated community 



87 



was in some way inferior to an all-white one, and fear 
of discussing the issue. Oak Park's position was an 
affirmative one: that a diverse community was superi- 
or to an all-white one and that a community could 
consistently work toward improvement while it inte- 
grated. 

Although virtually hundreds of new ideas were tried 
in Oak Park during the 1970-80 period, there are 
several that stand out as crucial determinants of Oak 
Park's future. Some of these decisions were, at times, 
unpopular, or at least did not have the total support of 
the community. But they were decisions with strong 
foundations, based on what Oak Park had learned 
from the history of communities that had failed to 
creatively meet the challenge of racial change. 

Oak Park has a Council-Manager form of govern- 
ment. Its trustees, appointed commissioners, manager 
and staff were able to interweave a variety of programs 
and ordinances directed at real estate practices, 
quality of housing stock, public safety, economic 
strength, and community image. A partial listing of 
those responses is as follows: 

1. New ordinances and/or supplementation of 
existing ordinances, including the banning of "for 
sale" or "sold" signs; regular updating of the Fair 
Housing Ordinance; licensing and inspection of multi- 
ple family dwellings; reporting of rentals in multiple 
family dwellings; requiring leases and security depo- 
sits; and other legal approaches to prevent the abuse of 
apartment buildings. 

2. Equity Assurance Plan which insures single 
family homeowners against depreciation of market 
values of their homes and was the culmination of five 
years of research by the Ford Foundation, Northwest- 
em University, Drake University, Urban Reinvest- 
ment Task Force, village staff and private groups. 

3. Construction of a $4 million Village Hall as a 
"vote of confidence" in the eastern section of Oak 
Park at a time when residents of that area were 
anxious about Oak Park's future, an action which 
stimulated economic growth in that area. 

4. Passage of a $1.5 million housing bond issue, 
earmarked primarily for rehabilitation of existing 
housing but also used to clear neglected properties and 
build parking facilities where sorely needed. 

5. Upgrading housing inspection procedures, add- 
ing inspectors to more closely monitor conditions, and 
initiating programs such as neighborhood walks and 
alley inspections. 

6. Increased, and more sensitive police protection 
through better training and additional personnel. 



7. Research and discussion of various approaches 
to guiding racial diversity by use of the Delphi Plan, a 
private research study to ascertain the community's 
goals; the establishment of a professionally staffed 
Community Relations Department; and the effective 
use of citizen task forces to study and make recom- 
mendations. 

8. Contracting with a professional public relations 
firm to assist in improving the media's approach to 
reporting Oak Park events, while developing both 
internal and external public relations programs de- 
signed to increase confidence in Oak Park's future. 

9. Appropriate use of Community Development 
Block Grant Entitlement Funds to rehabilitate hous- 
ing, beautify neighborhoods, and stimulate economic 
development, resulting in a strengthened community 
able to more positively meet the challenge of achieving 
racial harmony. 

10. Support of the Oak Park Residence Corpora- 
tion Housing Authority, which constructs and main- 
tains senior citizen housing, renovated multiple unit 
dwellings, administers the Section 8 housing subsidy 
program, manages senior and family housing, and 
identifies problem properties for consideration in 
various rehabilitation programs. 

11. Sponsorship of the Oak Park Exchange 
Congress, an annual forum for delegates from commu- 
nities across the country, who are dedicated to racial 
diversity and share their experiences in a professional 
learning atmosphere, meeting in Oak Park on even 
years and in other communities on odd years. 

The foregoing, and numerous other governmental 
approaches to community improvement clearly aim at 
destroying the myths associated with "changing" 
areas. Instead of deferring maintainance, decreasing 
services, and complacently resigning itself to the 
economic decline witnessed in Chicago neighborhoods 
that resegregated, Oak Park has deliberately set about 
to demonstrate that a racially diverse community can 
offer a superior way of life. 

School integration in a racially diverse community 
is a key variable to determining that community's 
future. The close relationship between education and 
housing has been researched for years, but it is in the 
last few years that studies by Dr. Gary Orfield and Dr. 
Diana Pearce have focused on the choice of open 
housing as a way to avoid the disruption of court- 
ordered remedies for segregated school systems. Or- 
field has found that cities which coupled open housing 
and school desegregation efforts had a better chance 
for long-range success. And, it has been primarily in 



88 



the small cities where a comprehensive view of the 
relation between school integration and housing pat- 
terns was evident that such coupling appeared most 
effective. Pearce noted that the absence of racially 
identifiable schools removes one of the mechanisms 
used to "steer" homeseekers to or from sections of a 
community. 

As Oak Park slowly integrated during the early 70's 
patterns of disproportionate racial enrollment began 
to appear. These were based upon a higher percentage 
of black renters than homeowners, thus resulting in 
larger black enrollments in elementary schools. Long 
before the District would have deviated from state 
guidelines directing racial balance in the schools, Oak 
Park's District 97 elicited citizen input and established 
a fifty member Committee for Tomorrow's Schools to 
study and make recommendations for the district to 
remain within the law as well as to maintain racial 
stability in the schools. In 1976, a grade reorganiza- 
tion plan was adopted which created two junior high 
schools in central locations and sought to achieve 
diversity in the remaining eight elementary schools. 
Prior to reorganization, some elementary schools had 
as many as 33.6 per cent minority students, while 
others had only 6.1 percent. After reorganization the 
range went from 1 1.7 percent to 22.8 percent. 

Already in existence was a Policy on Human 
Dignity which outlined five major human relations 
areas for the schools to pursue: (1) Safeguarding 
Human Dignity in the Schools; (2) Hiring and 
Promotional Practices; (3) In-Service Training; (4) 
Curricular Revision; and (5) Implementation and 
Reporting. This outline provided a framework for the 
Oak Park elementary schools that has been imple- 
mented in various programs to provide a learning 
environment sensitive to the needs of minority stu- 
dents as well as to create a more enlightened adminis- 
tration, teaching staff, and majority student popula- 
tion. 

Oak Park-River Forest High School did not have to 
face quite the same problems as the elementary 
schools. The high school is housed in one building that 
serves both Oak Park and predominantly white River 
Forest. Whereas the elementary schools are now about 
30 percent minority (21.7 percent black), the high 
school at 17 percent (12.1 percent black) more closely 
reflects Oak Park's racial proportions as a whole. (The 
fact that River Forest contributes very few black 
students to the high school offsets the larger black 
student population of Oak Park, which proportionate- 
ly exceeds its black residential population). Both 



Faculty and Parent Human Relations Committees 
were formed and encouraged to evaluate present 
programs and offer suggestions for new ones. They 
have been able to defuse potentially volatile conflicts 
at the same time as methodically endeavoring to foster 
interracial activities. 

Such progressive programs within the elementary 
and high schools are indicative of the need for diverse 
communities to be "ahead of the game." To anticipate, 
rather than react, creates an environment in which 
positive values permeate a community and may 
gradually accomplish behavioral changes. High quali- 
ty integrated schools also help to make integrated 
communities a more desirable choice. Some cities 
reward integrated neighborhoods by exempting them 
from school busing programs. In Oak Park, although 
some transportation of students is part of the racial 
balance plan, few negative reactions have come from 
parents or students. However, if a Chicago metropoli- 
tan-wide school busing plan were to be adopted, 
communities such as Oak Park might appropriately be 
exempted. Whatever the case. Oak Park has recog- 
nized that schools must accompany housing desegre- 
gation with a forthright approach that serves the 
community while it educates students. 

Private Programs Complement Village Policies 

The village's multi-faceted program to achieve 
racial diversity without succumbing to the "Chicago 
pattern" of block-by-block change has benefited from 
the support and creativity of the private sector. Early 
in its history, this was evidenced by input from the 
Hundred Clubs (network of block clubs), a planning 
group called the Citizens Action Committee, and the 
previously mentioned Oak Park-River Forest Citizens 
Committee for Human Rights. 

As the village entered the 70's and began to 
experience an increase in black demand, some local 
activists saw a need for a new organization — one 
which would critically examine the housing supply 
and demand, while at the same time engaging in a 
number of auxilliary objectives. 

The Oak Park Housing Center was developed in 
1971 and opened an office in a local church in mid- 
1972, the period during which some negative real 
estate practices and citizen anxiety had resulted in the 
beginnings of white flight. The Executive Director 
(author of this paper) has had a long history of 
involvement in open housing activities, as well as 
many other Oak Park organizationalties. 

The Center established as its goal: 



89 



. . .the creation of a stable, integrated community. To break 
the pattern of block-by-block racial change, the Oak Park 
Housing Center determined three tasks: to sell Oak Park as 
the kind of place where enriching interaction is taking place 
among the races; to attract the kind of people who respond 
to and strengthen that kind of climate; and to make certain 
that the fearful mood at the boundary of racial turnover is 
countered by substantial in-movement of whites. It has made 
a significant contribution toward achieving that goal, and it 
has moved beyond the boundaries of Oak Park to interact 
with the Austin community and a network of other housing 
centers covering the metropolitan Chicago area. 

Early in its existence, the Center listed homes for 
sale and matched clients seeking homes, knowing that 
many realtors lacked confidence in showing houses at 
Oak Park's eastern boundary to white homeseekers. 
Black homeseekers were often the only traffic for these 
homes, while mostly white sections of Oak Park, River 
Forest, and a few surrounding suburbs experienced 
virtually no black demand. However, after a few years 
of stimulating such demand, the realtors began to 
comprehend the long-term implications and some 
made the transition to affirmatively market housing to 
all races. 

With the single family home market somewhat 
normalized, the Center intensified its concentration on 
multiple unit dwellings, knowing that it was that 
segment of Oak Park's housing market which would 
more critically affect Oak Park's future. Observing 
Austin and other Chicago west side neighborhoods, 
the Center noted that it was invariably the comer 
apartment building that was the detrimental influence 
on single family homes rather than the opposite. 
Instead of identifying the owners of such buildings as 
the enemy, which tended to be a self-fulfilling prophe- 
cy, the Center's stafT chose to enlist the aid of owners 
and managers and to convince them that a racially 
diverse building was a possibility. Based on past 
experiences in Chicago, many owners believed that 
once blacks moved into a building, whites would not 
stay nor would new white tenants choose to rent. The 
Center, through a series of meetings and one-to-one 
dialogues, convinced owners that it was worth a try. 
Within a two to three year period after 1972, there was 
a new group of "missionaries" for racial diversity. 
They were and are the building owners and managers 
who learned that a new approach to diversity could 
work. The proof was that indeed there are whites 
willing and interested in living not only in racially 
diverse neighborhoods, but actually in racially diverse 
apartment buildings. 



Since 1972, over 40,000 clients have been attracted 
to Oak Park and the Housing Center. Persons who 
wish to receive the free rent referral service offered by 
the Center must come to the office to register, at 
which time they are indoctrinated in Oak Park's goals, 
and they find an open Hne of communication with the 
village made available to them. In addition to listings 
of available apartments, printed materials about the 
village, information about and access to the Fair 
Housing Network, and appropriate referral if they 
should encounter discriminatory practices are made 
available to each client. Although a move that 
contributes to racial diversity is encouraged, it is made 
clear that all clients have a right to housing of their 
choice and can pursue normal avenues to achieve this. 

Housing counseling is only part of this agency's 
direct assistance to clients. The unique Apartment 
Preview Program, thought to be the only one of its 
kind in the country, gives substantial information 
about an available unit to the client, at the same time 
as it affords an opportunity for consultation with 
building owners. Created three years ago, the program 
has a staff person who previews apartments listed for 
rent with the Center. The Preview does not duplicate 
official housing inspections; it is more concerned with 
the marketability of the unit. Annual building inspec- 
tions by village staff see ten percent of the units in a 
building. Over a twelve-month period, the Center may 
see up to fifty percent of the units at different times of 
the year, while gaining more familiarity with the 
owner's approach. The Previewer is perceived as a 
helper — the individual who can transmit valuable 
information about the building to the consumer. The 
program effectively ties together the supply and 
demand sides of the market in the best interests of the 
community. The Preview form supplies basic informa- 
tion, such as room sizes, number of outlets, amenities 
in the building, availability of parking and other facts 
helpful to those seeking rentals. Its successes are well 
documented and show that of the 558 rental units 
previewed during the last twelve-month period, over 
52 percent of available units were rented to Housing 
Center clients. The Apartment Preview Program is 
replicatable in other communities, for both the private 
and public housing sectors, since it monitors the 
quality of housing, offers professional consultation to 
the providers of housing, and conveys desired infor- 
mation to the consumer. 

The Oak Park Housing Center reinforces its major 
program areas by cooperation with the village govern- 
ment, schools and other forces concerned with racial 



90 



diversity. It has taken a leadership role in the Oak 
Park Exchange Congress; produced a film about Oak 
Park and its desire to achieve integration; been 
featured in several television shows; actively worked 
within the Fair Housing Network to make racial and 
economic diversity a reality within the metropolitan 
Chicago area; and initiated new joint programs be- 
tween residents of the Austin community to the east 
and Oak Parkers. Researchers from as far away as the 
University of Bradford, West Yorkshire, England, 
have dissected the Housing Center's low budget, 
folksy approach and have generally concluded that the 
program has worked and worked well. National 
recognition has come in various forms: from being one 
of three programs to quahfy Oak Park as a winner in 
the 1976 "All America City" awards to "Certification 
of Fair Housing Achievement" from H.U.D. The 
mere fact that the Center survives into its tenth year, 
still responsible for its own fundraising, using a small 
staff plus volunteers, and selling people on a concept 
not universally popular, is in itself a triumph. 

Today and Tomorrow — Can Diversity Survive? 

With its many efforts toward establishing a unitary 
housing market in a sea of segregation, Oak Park has 
made substantial progress. Although less than one 
percent black in 1970, the 1980 census figures show 
the following: Whites, 85.2 percent; Blacks, 10.8 
percent; Asian, 2.7 percent; Other, 1.3 percent; Span- 
ish origin, 2.5 percent. However, when we look at Oak 
Park's twelve census tracts, it is obvious that those 
variables which led demographers to predict Oak 
Park's resegregation, have been influential in creating 
a disproportionate black population in sections of the 
community next to Chicago, between the rapid transit 
lines, and having a high percentage of rental units. 

The twelve census tracts show a variance from a 
high of 95 percent white to a low of 66 percent, with 
the census tract showing a 34 percent minority 
population that is adjacent to Austin and between the 
transit lines. Conversely, those sections farthest from 
Austin with a high percentage of single family homes, 
and most distant from the rapid transit, have the 
highest proportion of whites. The public reaction to 
these figures, when they were released in 1981, was 
not what one might have expected. There was little 
evidence of fear, such as homes being placed on the 
market for sale or tenants moving out in large 
numbers. In fact, the only obvious reaction was for 
local newspapers to review Oak Park's programs to 
encourage racial diversity throughout the community. 



I 



Oak Parkers are not satisfied to judge their progress 
only by percentages and census data. Although 
certainly indicators of progress in achieving diversity, 
these statistics are only part of a community's mea- 
surement of success or failure. The rate and quality of 
change are perhaps as important as the extent of 
change. A percentage rate of approximately one 
percent a year is slow for the Chicago area, in which a 
twenty to twenty-five percent change from white to 
black has not been uncommon. The quality of change 
is a more difficult variable to determine. One way to 
discuss quality of change is to view the diversifying 
process as not one that involves only residency, but 
one in which black invovlement is evident throughout 
various phases of community activism or participa- 
tion. In that sense. Oak Park has succeeded more than 
most other communities. Blacks are participating in 
both official and unofficial capacities in government, 
schools, business, social and cultural affairs. A visit to 
the Village Hall makes a deliberate and credible 
statement to the newcomer, for blacks are employed 
there in many capacities within the staffs of all major 
departments, including police and fire. The schools 
employ blacks in positions ranging from administra- 
tive staff to teaching and custodial. Local businesses 
have followed the government's lead in equal hiring 
practices. From Little League to School Board selec- 
tion committees, blacks are in evidence, though some 
activities show a greater black representation than 
others. By and large. Oak Park has purposefully 
sought to make diversity a quality that moves beyond 
mere residency patterns. 

Communities which have as their goal a unitary 
housing market would do well to study thoroughly the 
institutional framework that must be created to 
establish and reinforce new patterns of behavior. 
Government is unquestionably the first and most 
important institutional force which, in combination 
with the private sector, can encourage these new 
patterns. However, local governments must function 
in a somewhat cooperative manner with surrounding 
governments, and it has become typical in the Chicago 
area for diverse communities to be surrounded by 
segregated ones. Thus, we have witnessed a dual 
housing market, with a now spotty pattern of unitary 
markets within individual communities. We have yet 
to witness a unitary market covering a major suburban 
area. In Oak Park's case, the south and north 
boundaries separate Oak Park from all-white areas; to 
the west are two communities — one racially mixed as 
to its rental market but all white in home ownership, 



91 



and the other with a very small black population; and 
to the east, a most resegregated black community that 
is beginning to attract some white families. As Carole 
Goodwin so aptly states in The Oak Park Strategy: 

Despite the optimism of its leaders, Oak Park has not totally 
solved its racial problems. Black in-migration has been slow 
but is still accelerating. Even the most optimistic leaders 
acknowledged that Oak Park could not successfully inte- 
grate unless its neighboring communities could be persuaded 
or compelled to open their doors and unless blacks could be 
persuaded to seek homes there as well as in Oak Park. The 
dual housing market — both its institutional mechanisms and 
the perceptions of its existence by white and black home- 
seekers — has created a heavy burden that will not soon be 
overcome. 

Black demand does increase as communities reach a 
higher black percentage. The community is now 
perceived as "safe" by black homeseekers, and steering 
both by some elements of the housing industry and 
self, creates a disproportionate demand for the inte- 
grated community. Oak Park has already seen black 
demand increase from almost non-existent in the mid- 
1960's to about half of those seeking rental housing in 
1981. What Oak Park has been able to maintain, 
contrary to predictions, is a healthy white demand, 
thus balancing the overall demand, most particularly 
in the rental market. The ultimate problem is that 
communities which are openly diverse and demon- 
strate "good intent" to accomplish integration almost 
always find themselves receiving a disproportionately 
high share of black demand, while at the same time 
suffering from a decrease in white demand, especially 
in neighborhoods where higher black residency is 
perceived. The reasons for this are: 

1. black homeseekers' perception of the already 
open area as an "easy" and safe move; 

2. proximity of the open area to an all-black area; 

3. the great need for housing by urban blacks who 
suffer from the scarcity and continuing loss of 
housing in urban black areas; 

4. steering; 

5. the fact that housing stock in most Chicago 
area diverse communities is affordable housing for 
many black homeseekers; 

6. the expectation that integration is a short-lived 
state which will ultimately shift to resegregation; 

7. the continuing existence of communities that 
intentionally project a "closed" image. 

Thus, any discussion of eliminating the dual housing 
market must recognize the problems faced by commu- 
nities or neighborhoods that have a unitary market. 



The Next Step: Federal Reinforcement 

The growing number^ of American communities 
committed to racial diversity is encouraging. It indi- 
cates to us that the "American creed" is finally 
becoming the "American deed." As communities 
come together to share experiences at the Oak Park 
Exchange Congress, for example, there is one common 
thread tying them together. They all want more 
support from the federal government and the nation as 
a whole. They see themselves as an endangered 
species. They believe they have done more to end the 
long, sad history of racial segregation in housing than 
other communities, but are on the "firing line" more 
than closed communities. They feel isolated and 
vulnerable when critics ask why integration should be 
preserved or supported, and few voices are heard in 
support of their contention that individuals who want 
to live in diverse communities deserve a choice. They 
want desperately to succeed over a substantial period 
of time, yet they think the "cards are stacked against 
them." 

These perceptions are not far from the truth. For, 
although this country has enforced its laws to end 
segregation in education and employment and has 
often attacked discrimination in housing, the lack of a 
strong commitment to support racially diverse com- 
munities has been evident. Dr. Gary Orfield stated, 
"Federal officials today know a good deal more about 
the impact of federal construction decisions on the 
snail darter than on segregation of blacks and Hispan- 
ics." Yet, when school desegregation efforts falter and 
fail in large urban areas, we call upon experts such as 
Orfield to solve problems that the federal government 
has, in some instances, exacerbated by lack of policy 
regarding housing patterns. Robert L. McGlasson, 
who wrote "Tipping the Scales of Justice: A Race- 
Conscious Remedy for Neighborhood Transition" for 
the Yale Law Journal, began his research with the 
intent of writing about segregated education, but 
recognized the inadequacy of viewing schools as 
separate from communities and housing. He observed: 

Although the phenomenon of residential segregation most 
frequently gains attention when the courts fashion remedies 
in school desegregation cases, its influence on the nation's 
life is at the same time both less dramatic and more 
insidious, implicating issues of health, housing quality, and 
social insularity. In contrast to this segregated reality, the 
ideal of stable, racially integrated neighborhoods is appeal- 
ing, both in its own right and as an efficient means of 
integrating the public schools. One formidable barrier to 
integrated communities, however, has been the recurrent 
pattern of residential resegregation: a predominantly white 



92 



neighborhood becomes temporarily integrated, until whites 
flee, leaving it predominantly black. 

What more can be done to reinforce the programs 
initiated by communities showing good intent and 
actions designed to foster a unitary housing market 
and racially diverse populations? A firm commitment 
to racially diverse neighborhoods must first and 
foremost be established at the federal level. Although 
many government officials acknowledge that integra- 
tion is implicit in federal fair housing legislation, there 
has been a lack of discussion or interpretation of these 
laws to focus national attention on housing integra- 
tion. 

The federal support of communities herocially 
endeavoring to foster multi-racial housing and educa- 
tional opportunities can be undertaken in a number of 
ways: 

1. Identify all of the communities that have 
demonstrated good intent in achieving racial diver- 
sity and now have a population proving success in 
that regard. 

2. Designate a limited number of diverse commu- 
nities as model, experimental sites in which various 
programs to encourage long-term stability can be 
tested. 

3. Facilitate the formulation and implementation 
of a solid plan for preventing resegregation by: 

a. Calling together recognized experts in the 
field of housing and school segregation to develop 
a preliminary plan; 

b. Meeting with active and interested local and 
state officials, as well as representatives of the 
private sector, to gather their reactions and input 
to the plan; 

c. Providing the necessary resources, both fi- 
nancial and human, to implement the plan which 
evolves from this process. 



4. Increase enforcement of federal fair housing 
laws in all-white areas which present havens to 
whites desiring to avoid residence in diverse com- 
munities. 

5. Ensure more and better coordination of federal 
programs to avoid decisions which would negatively 
impact on presently diverse areas. Dr. Gary Or- 
field's "Desegregation Impact Statement," modeled 
after the environment impact. 

6. Develop ways to reward communities that have 
adopted school and housing diversity plans and 
have effectively implemented them. 

7. Document experiences of presently diverse 
communities to provide models for replication and 
to learn from both successes and failures. 

There are, no doubt, many other ways that diverse 
communities could be supported in their efforts. The 
first step might be, I think, a strong public statement 
at the national level in favor of those communities and 
their goals. Without that and subsequent efforts, this 
group of communities will almost certainly continue 
to suffer from the insecurities presented by the dual 
housing market. 

If communities like Oak Park were to fail in their 
quest for racial diversity, the Chicago metropolitan 
area would be that much farther from dissolving the 
dual housing market, and the nation might appropri- 
ately conclude that the dream of a long-term, multi- 
racial community is unlikely to ever become a reality. 
This nation needs models such as Oak Park to point 
to — models which demonstrate that there are innova- 
tive means of reaching that dream. Without such 
models, we may be suffering endlessly and needlessly 
from the social problems and racial tensions created 
and carried on by a divided society. 



93 



Recommendations for a Chicago Housing 
Plan to Assist Low and Moderate Income 
Tenants 

by David Orr, Alderman, 49th Ward, Chicago 

My remarks will be based on specific housing 
problems that directly affect my constituents. While I 
am concerned about the interest rate dilemma, the 
weakened building industry, and other such prob- 
lems — time allows me only to focus on housing 
problems that primarily affect low and moderate 
income people; groups that generally do not have 
effective lobbies representing them. 

I represent Chicago's 49th Ward, a neighborhood 
which has experienced many of the housing problems 
found throughout the city. The 49th Ward is a densely 
populated urban area, in which most people are 
tenants. While most residents are also middle-class, 
there are significant sections of low and moderate 
income people in the area. Our neighborhood has 
experienced significant numbers of condominium con- 
versions, rehabilitation of small and large apartment 
buildings, deferred maintenance on other large build- 
ings and controversy over subsidized housing and over 
"gentrification." 

The single greatest housing problem for many 
Chicago tenants is that their rents are outpacing their 
ability to pay. Obviously, those hardest hit by the 
effects of increasing rents are those tenants in the 
moderate or low income range. In my own area, the 
single largest group of low and moderate income 
tenants who are most vulnerable to rising rents are 
senior citizens. 

In order to begin seriously formulating successful 
policies to improve the affordability and quality of 
Chicago's housing stock, the following major prob- 
lems must be addressed: 

1. An increasing number of Chicagoans (now in 
the hundreds of thousands) cannot afford to pay 
rents that are being asked in the private market. 
Even where no rent gouging exists, rents are simply 
outpacing many Chicagoans' ability to pay. 

2. Twenty-five percent of Chicago's housing stock 
is substandard, much of it seriously dilapidated. 
There are very few effective policies to deal with 
substandard apartments. Tenants who cannot get 
satisfactory action from their landlords must call for 
city building inspectors — a very ineffective way to 
get repairs made. I say this as there is little if any 
impact from filing building code complaints unless a 
building is sued and actually gets into court — a 



process that often takes 5 to 8 months from when 

the complaint is made. 

There is a procedure for complaint in the Depart- 
ment of Housing that very few of Chicago's one and a 
half million tenants know about. Complaining here 
has led to the resolution of a few hundred tenants- 
landlord complaints. But why the city has not widely 
publicized this possible "service" is troubling. 

There is further no city assistance for relocation of 
needy tenants in the private market. The relocation 
assistance for tenants in vacated buildings or urban 
renewal sites is shoddy but there is a policy. 

But for those seniors, for example, who are "con- 
doed" out or who can't afford the rent hikes, there is 
no city assistance — nor is there a coordinated policy to 
involve the city with private agencies who help certain 
needy tenants. 

When it comes to new building programs or 
mortgage write-down programs or home loan assis- 
tance, there are some city programs that work with 
varying degrees of success and failure. 

But my major point here is that the problems of 
most Chicagoans who are renters (middle-class and 
low income) are not addressed by city policy. Rather 
they are left to the dictates of the private market. 

The following specific policies would, I believe, 
greatly improve the housing situation in Chicago. 
Many of these recommendations will be brief and I 
would expect interested parties to follow up with 
specific questions. 

1. The city must have a visible, well coordinated 
housing plan that includes policies to meet the various 
problems I've listed above. 

The city must collect and make available informa- 
tion on vacancy rates by neighborhood, rent levels and 
trends in the real estate market, patterns of demoli- 
tion, deteriorated housing and other basic data that 
will help the city plan. The city, for example, over the 
last 3 years has not had nor presented to the aldermen 
information on the numbers of condos and their 
impact on the rental housing market. 

2. The city needs a comprehensive Tenant-Land- 
lord Act which for example includes repair and deduct 
legislation — to enable tenants after a certain period of 
time to make repairs and then deduct the cost from 
his/her rent. 

3. A comprehensive housing policy should include 
a Fair Rent Commission; a commission empowered to 
hear tenant complaints as to rent gouging, and with 
the authority to arbitrate and/or set rental rates on a 
case by case approach. Besides combatting rent 



94 



gouging, Fair Rent Commissions have been successful 
in promoting improved building maintenance as land- 
lords want their property up to code when they seek 
rent increases. 

Finally, such legislation must include beefed-up 
financial and technical assistance within the Depart- 
ment of Housing to provide more information on 
contractors on a regular basis. Housing Court must 
also be made more available to tenants wishing to take 
action against such contractors for consistent non- 
compliance. 

4. The city needs a plan for low equity co-ops that 
checks housing speculation and provides decent hous- 
ing at more affordable prices. 

We need a right of first refusal policy for sale of all 
buildings and economic and technical assistance for 
low and moderate income tenants to collectively 
purchase their buildings. A similar plan in Washing- 
ton, D.C. has led to several hundred conversions by 
the tenants themselves. 

5. To provide more tax dollars for needy, low and 
moderate income renters, the federal government must 
put a cap on the interest to be deducted for federal 
income taxes. It is obvious that priorities are askance 
when there is no substantial money available for a 
million needy seniors — when wealthy Americans 
across the country are being subsidized through 
interest write-offs for homes that cost hundreds of 
thousands of dollars. Instead of mirroring federal 
Reaganomics policies, the city must find a way to 
augment the most serious cutbacks with assistance 
programs of its own. 

6. An effective comprehensive city housing plan 
must also include a proposal for new condominium 
legislation. There are already good proposals intro- 
duced into the City Council — none of which, unfortu- 
nately, have been implemented. The present proposals 
would increase protection for consumers wishing to 
buy, as well as easing the impact of those dislocated by 
conversion. 

7. An effective housing plan must be one which 
focuses on conservation of present housing stock as a 
top priority. Maintaining the present housing stock 
calls for reform in the present Building and Rehab 



Code. At long last, the City Council Committee on 
Building and Zoning has just begun hearings on a new 
Rehab Code. Hopefully, the outcome will prove 
successful. 

A conservation policy will not be complete without 
a wholesale reform of Chicago's Housing Court, 
which includes a change of attitude in the city officials 
and judges working within the housing court system 
itself More efficient and timely inspections, adequate 
and available information on the complete status of 
court records and affected buildings, and tougher 
prosecutions of repeat offenders in court are all 
essential to save buildings before they reach such a 
state that they must be demolished. 

8. Saving multiple unit apartment buildings will 
necessitate more low interest loans and/or grants to 
owners who are willing to invest in these hard times. 
The City Administration has been working on a plan 
of this nature for more than a year, and yet nothing 
official has been introduced into the council. The bond 
market and federal regulations have made this task 
more difficult. But further delay will only increase 
abandonment and demolitions. While this program is 
still on the back burner, an effective housing policy 
must make it a top priority. 

Reforms need not, and in fact must not, be limited 
to legislative enactments. In the area of housing, 
tenant organizations can be most effective in bringing 
about significant reforms. A powerful tenants group 
can be an important tool in achieving building code 
compliance and teaching tenants their rights and 
responsibilities. The most comprehensive plan for 
housing reform would be one in which the City 
Administration is at least tolerant of, and at most 
supportive of such community organizations. 

These are some recommendations for policies that 
would benefit Chicago and especially urban tenants 
and urban neighborhoods. Again, there are other 
essential parts of a total housing policy that, had I the 
time, I would incorporate. But because I believe the 
city's majority tenants are the least planned for and 
the least protected by public policy, I have focused on 
their needs. 



95 



State Enforcers 



Observations and Suggestions on 
Chicago's Shrinking Supply of Decent and 
Affordable Rental Housing — Public and 
Private 

by Ron Stevens, Supervisor, Housing Division, Cook 
County State's Attorney's Office 

Introduction 

My own thumbnail description of the dual housing 
market in the Chicago metropolitan area is that it 
consists of decent habitable housing which is afforda- 
ble by middle income and upward mobile people on 
the one hand, and badly deteriorated, often uninhabi- 
table housing which is frequently only barely afforda- 
ble by poor and lower income people. This second set 
of housing is also mostly inhabited by minority 
families, black and Hispanic. 

The only signs of this dual market disappearing are 
in the wrong direction. Even white middle income 
level people are finding themselves being displaced 
into substandard housing and/or paying rents which 
are higher than they can afford. But that is merely 
making things worse still for those on the lower ends 
of the economic scale, especially minority families. 

There are many causes for the existence of this dual 
market as well as for its maintenance. And there are a 
variety of perspectives from which one may observe 
the market. The perspective to some extent dictates 
the type of solution, or at least the emphasis which is 
likely to be prescribed by any observer. Because of 
this, I will briefly explain my vantage point, or my 
bias. 



I spent more than three years as a neighborhood 
staff attorney with the Legal Assistance Foundation of 
Chicago, concentrating mostly on housing problems 
and working in the Englewood and Pilsen communi- 
ties. I represented both tenants (in private landlord- 
tenant disputes) and landlords (in building code 
enforcement cases and related matters). I also repre- 
sented tenants in public housing and worked exten- 
sively with community groups. I then spent two years 
as staff attorney for Business and Professional People 
for the Public Interest (BPI), where I served as 
Coordinator of The Housing Agenda, a loose city wide 
collection of community-based and other organiza- 
tions working on low and moderate income issues. 
Since July, I have been Supervisor of the Housing 
Division of the Cook County States Attorney's office. 
My primary concern for the past five years has been 
the housing needs of low and moderate income people, 
whether tenants or owners. My perspective has been 
strongly shaped by my work with community-based 
organizations actively involved in housing problems in 
their own neighborhoods, throughout the city of 
Chicago. 

I will concentrate my observations on the role of 
private actors and local government in the perpetua- 
tion or elimination of this dual housing market, as I 
have described it. My emphasis will be on deteriorat- 
ing conditions and the "stick" approach (as opposed 
to the "carrot" approach) to better housing manage- 
ment and, to a lesser extent, on the role of public 
housing. 



96 



The views expressed are my own and do not 
necessarily represent the views of the State's Attorney 
of Cook County. 

The Nature of Chicago's Housing Shortage 

The single, dominant fact about housing in the 
Chicago metropohtan area is that there is not an 
adequate supply of decent affordable housing and that 
the supply which does exist is shrinking at an alarming 
rate. The demolition of rental units is most drastic in 
the areas of the metropolitan area inhabited by low 
income and minority people. According to a study 
conducted by the Metropolitan Housing and Planning 
Countil (MHPC — "Housing Chicago and the Re- 
gion," published March 1981), 38 percent of all the 
demolition in the city of Chicago over the last 10 years 
occurred in 5 of the 76 community areas: East 
Garfield, North Lawndale, Woodlawn, West Town 
and Englewood. In the first three of these communi- 
ties, over 20 percent of the entire housing stock was 
demolished during that period. All five communities 
are predominantly low income, minority communities, 
and all are on the west or south sides. 

Nearly 90 percent of the new construction in the 
Chicago metropolitan area during 1970-79 occurred 
in the suburbs. Where new construction is occurring 
in the city, it is not replacement housing for the units 
lost. The MHPC study showed that another 5 of the 
76 Chicago communities accounted for 43 percent of 
all new construction during the same period. Predict- 
ably these communities were all north lakefront 
communities, from the loop to Uptown — generally 
middle to upper income areas. 

Other significant contrasts between demolition and 
construction patterns were revealed by the study. In 
1970 more than one third of the rental housing units 
in the city were in 2-4 flat buildings, making that 
building type the largest supplier of rental housing. 
However, since 1970, that type of housing has suffered 
as net loss of more than 19,000 units. Among 5-7 unit 
buildings, a net loss of another 4,500 units occurred. 
The familiar large walk-up buildings (with 10-49 
units), is the most seriously affected type of housing, 
with almost one half of the units in that type of 
building being lost in the 5 year period of 1970-75. 
Some of these units were lost to condo conversions, 
but were nevertheless lost as rental housing. On the 
other hand, most of the new construction, particularly 
those units which may include rental units, consists of 
large buildings which are presumably mostly hi-rise in 
nature, given their north lakefront location. 



Beyond the reality reflected by these figures lies 
another reality at least as disturbing. These figures do 
not deal with the fact that among the remaining rental 
units, many thousands are substandard, and a fright- 
ening number are dangerous and virtually, if not 
literally, uninhabitable. There is no precise way of 
measuring the number of units that fit these catego- 
ries. In April of this year, more than 17,000 buildings 
had active court cases pending against them. In theory 
these cases reflect other than very minor building code 
violations, or they would not be in court. Many do 
involve primarily technical violations, but for every 
building of that type in court, there may be another 
with serious violations that has not yet been brought 
to court. One need only visit Chicago's neighbor- 
hoods, particularly the low income areas, to observe 
the desperate housing conditions in which so many of 
our families are forced to live. 

The Role of Individual Private Actors in the 
Dual Process of Deterioration of Housing and 
Rising Rents 

Until the central fact of a shrinking and already 
inadequate supply of decent affordable housing is 
faced and changed, we can look forward to less rather 
than more "equal housing opportunity." In order to 
devise solutions, we must look to the causes. 

The bulk of Chicago's housing stock is more than 
40 years old, and when subjected to Chicago's harsh 
climate, will quickly deteriorate unless it is adequately 
cared by for by its owner. Other forces, ranging from 
fires, vandalism, and poor care by either tenants or 
owners can rapidly accelerate the deterioration pro- 
cess. The economic pressures of rismg utility, tax and 
maintenance costs operate as disincentives to proper 
maintenance. Even the well-meaning, conscientious 
landlord who is adequately financed can be frustrated 
in his attempt to keep his property maintained, 
especially if he is committed to holding rents down to 
a level which is really affordable. 

The economic conditions of the country are obvi- 
ously a serious factor with high interest rates and 
rising prices making privately financed new construc- 
tion and substantial rehab so expensive that only the 
very well off can afford either. But rather than merely 
blaming the economy as a whole, thus letting individu- 
al actors completely off the hook, we must also look at 
more immediate factors, ones which we can act to 
correct on a relatively local and relatively short range 
basis. It is this area on which I will focus, attempting 
to explore areas in which individual actors in the 



97 



housing arena make choices and priorities that do 
make a difference — so far, a negative difference. I will 
then suggest ways to change or redirect the future 
decisions of those actors, so that some "forces" can be 
reversed or at least slowed down. 

The first and by far most reprehensible set of actors 
is that of slumlords — people who have created an 
industry out of the process of drawing every ounce of 
profit and life out of our housing stock. Taking 
advantage of tax laws, permissive code enforcement 
systems, corrupt or incompetent public employees, 
racial and other forms of discrimination practiced by 
other landlords, and the general shortage of housing 
units, these people exploit tenants who have no place 
else to go and they destroy good or salvageable 
buildings, in the process turning decent neighborhoods 
into slums — all in the interest of maximizing their 
short term profits. The worst of this lot will stop at 
nothing to drain the last penny out of a building, even 
at the cost of human life, whether through permitting 
the existence of dangerous conditions or more simply 
by torching the building for insurance money or tax 
advantages. 

Our society claims to abhor these people but our 
actions speak more strongly than our condemnations. 
In the private sector, the real estate industry argues 
that the force to fear is the exercise of tenants' rights 
and often actively opposes efforts to crack down on 
slumlords, all in the name of "freedom from regula- 
tion." The industry has proven that it neither can nor 
will regulate itself, and continues to resist virtually all 
forms of regulation. Indeed, one of the chief goals of 
the real estate industry in Illinois is the abolition of the 
current remedies available to tenants in buildings 
which the courts find "uninhabitable." 

A second set of actors is another rising class of 
people: real estate speculators. These people share 
with slumlords the belief that housing is essentially an 
investment opportunity, but differ from them in how 
far they will go to maximize profits. The speculator 
does not engage in long term, conscious bleeding of a 
building, nor in arson. The speculator's is in a 
different direction, the quick and inexpensive conver- 
sion of relatively inexpensive real estate into expensive 
real estate, the result a tidy profit. This is accom- 
plished through the purchase of housing at depressed 
cost (whether because of the neighborhood or special 
circumstances, such as tax sale or an unsophisticated 
owner) and with minor surface rehab or sophisticated 
marketing, reselling the property at a much higher 
cost. The net result of course is more expensive 



housing (though not necessarily better housing), or 
more to the point, the result is a loss of affordable 
housing. 

A third set of actors is less culpable, but clearly part 
of the problem. This is the landlord who is neither 
slumlord nor speculator, but who succumbs to the 
temptation of charging "what the market will bear", 
regardless of its relevance to the owner's actual costs, 
or normal profit margins. This is not the owner who 
merely passes on the escalating costs of energy, taxes, 
maintenance, etc. Instead this owner takes full advan- 
tage of the competition for decent housing which has 
been created by the extraordinary shortage of decent 
units, and charges the highest rent he or she can get, 
exercising no restraint in a system which effectively 
provides virtually no external restraints on rents. This 
category of owner contributes significantly to the 
rapidly skyrocketing cost of obtaining housing — 
which of course makes decent housing increasingly 
unavailable to low income people. Indeed moderate 
income people are now finding decent housing a rare 
commodity at the prices they can afford to pay. 

Tenants too must share some responsibility, because 
there are tenants who destroy buildings both by 
neglect and by design. And the bad tenants contribute 
to a fortress mentality on the part of landlords leading 
to a distrust of all tenants, and to a fear of "tenants' 
rights." Many community organizations have recog- 
nized the importance of tenant selection and include 
this in pressures against their local landlords. Tenant 
organization activists need to distinguish better be- 
tween good landlords and bad landlords, and between 
good tenants and bad tenants. 

Another recent phenomenon is a major factor, if 
only through a ripple effect. That phenomenon is large 
scale condominium conversion. There is nothing 
sinister or even inherently negative about condo 
conversions, per se. The problem lies in the scale and 
the type of "condomania" that is being pursued. 
Condo conversions tend to be little more than one 
more way to wring maximum short term profits out of 
existing housing stock, taking full advantage of the 
shortage of adequate housing. The overall result of 
these conversions is to drive up the cost of the units 
converted (artificially) and to force tenants into other 
scarce housing units, driving up the costs of those 
units. 

Meanwhile, as more and more rental units are lost 
due to condo conversions, demolition, abandonment, 
or sheer uninhabitability, tenants are forced either into 
higher and higher priced housing (including condos), 



98 



or more likely into competition for lower quality 
housing than that in which they had been living, 
driving up its cost and forcing lower income tenants 
into less habitable dwellings. A massive squeeze is 
taking place. Because of the movement down (m 
quality) by middle and moderate income people — due 
to rising rents, and the loss of units at the bottom — 
even substandard housing is becoming expensive 
because of the competition for existing units. Those on 
fixed incomes must cut other necessary expenses such 
as food and clothing to compete with those with 
relatively higher incomes. 

Another factor contributes significantly to inflated 
rental costs in deteriorated areas of the city: discrimi- 
nation against families with children. Because families 
are excluded from many of the more habitable 
buildings of the city, particularly in the moderate and 
middle income areas of the city, families with children, 
particularly minorities, are forced into overly crowded 
substandard housing. And because they have little 
other choice, such families often pay remarkably high 
rent for badly deteriorated, even dangerous housing. 

When housing is discussed within the private sector, 
it is discussed in terms of market. The problems tend 
to be defined not in terms of public need, but rather in 
terms of private benefit. The problems are seen 
through the eyes of the investor, the developer, the 
builder. These actors share a common interest: maxi- 
mized profit which requires higher rather than lower 
cost to the consumer. 

We must begin, even in the private sector to 
perceive housing as a long-term public investment, not 
a short-term private one. The solutions to the short 
term interests of investors today are diametrically 
opposed to the long-term interests of society. The 
private sector has not only failed to solve the housing 
problems through its reliance on "free market" forces, 
it has either created the crisis we are beginning to 
experience, or it has at the very least badly exacer- 
bated it. 

The problems involved in providing decent afforda- 
ble housing in the private sector underscore dramati- 
cally the importance of government financed housing, 
of which there are essentially two types: subsidized 
housing (housing which is essentially private, but 
which is subsidized directly by the government) and 
public housing (housing which is the direct responsi- 
bility of the government, paid for and maintained by 
the government). 

In addition, local government must be more, rather 
than less, involved in regulating actors in the private 



sector. Private multi-family rental housing must be 
approached and protected as the disappearing public 
resource which it is. 

Subsidized Housing 

While I will not discuss subsidized housing at 
length, recent turmoil surrounding it seems to require 
some comment. Many observors have become increas- 
ingly skeptical about the effectiveness of government 
subsidies to provide housing effectively. While the 
criticisms vary, perhaps the most serious is the one 
which charges that the programs amount to a subsidy 
for developers, with relatively few low income people 
benefitting from a very large public investment. In 
Chicago, HUD and the Illinois Housing Development 
Authority (IHDA) have both come under this attack. 
Subsidized projects located on prime real estate with 
air conditioners and other amenities end up with 
supposedly "market rate" rents which may be double 
the actual rent structure of the surrounding communi- 
ty. One IHDA project has a swimming pool and 
tennis courts. It is not surprising that neighbors of the 
projects and others question the wisdom of spending 
the few federal dollars available for low and moderate 
income housing in this way. While a relatively small 
number of families benefit directly from such projects, 
some have argued, far more low and moderate income 
families suffer either from the inflation of rents which 
these large projects may aggravate, or by the appear- 
ance of large scale housing assistance to low income 
people where in fact there is relatively little. 

Unless governmental subsidy programs are resh- 
aped to more effectively serve those for whom the 
programs are intended, and to do so without feeding 
the negative forces of inflation and gentrification in 
those communities in which it is placed, they may 
disappear altogether. Neither the low and moderate 
income people for whom the programs are intended, 
nor the middle income people who pay much of the 
cost seem convinced that current programs work. The 
chief defenders of the programs are the public employ- 
ees who operate them and the developers who depend 
upon them. 

Public Housing 

Public housing may well be the only long term 
recourse for the poor. Because of the inflated cost of 
housing, especially for new construction and substan- 
tial rehab, even government subsidy has been inefi"ec- 
tive at holding rents down to a level afl'ordable by low 
income p>eople or at producing low income housing on 



99 



sufficiently large scale. It may well be that we can only 
provide an adequate amount of decent low income 
housing in the Chicago metropolitan area through 
public housing. 

Public housing in Chicago has been both victim and 
offender. It has had the impossible task of providing 
most of the housing for Chicago's poor and low 
income people while being denied the necessary 
financial support or public support to do so. But it has 
also served as slumlord and as provocateur, aggravat- 
ing rather than defusing the fears of moderate and 
middle-income people, especially in white communi- 
ties. 

Many who work with public housing projects but 
are not part of the public housing bureaucracy say that 
there is no institution in the area which is more quilty 
of incompetence and corruption. Public housing resi- 
dents may be the most vulnerable people in our 
metropolitan area. They have no financial resources of 
note; they have no political influence; they are 
prisoners in a dangerous and dehumanized jungle, 
ignored or despised by the outside world. Because of 
their vulnerability (if they lose their public housing — 
where can they go?), they make perfect victims. 
Because of our lack of concern, we have used our 
public housing agency as a patronage dumping 
ground, where merit means little if anything. Those 
public housing employees who do care and who are 
competent sometimes become despirited by lack of 
supix)rt. The mood in most large projects is one of 
hopelessness where survival is the primary goal. The 
failure of highrise public housing projects has become 
a cliche. Proposals to tear down or convert them to 
condos are frequently heard. 

Yet public housing has an essential place in our 
cities. We must struggle to devise ways to humanely 
house our poor and low-income people, both senior 
citizens and families. The most promising path seems 
to be scattered site housing, which avoids the prob- 
lems of high concentrations of poor people in already 
depressed (and depressing) communities. Yet, the 
scattered site program in Chicago is in serious trouble. 
The mayor has suggested it may be discontinued in 
order to divert funds into maintenance costs of the 
troubled old massive projects. But even if the program 
is continued, the signs are that it will continue to 
exacerbate the racial and class divisions in our city, 
rather than heal them. Communities throughout the 
city have an understandable lack of confidence in the 
Chicago Housing Authority's ability to properly 
manage and maintain its property. There are long held 



fears and prejudices which threaten to explode at the 
mere mention of public housing unless those responsi- 
ble show caution, sensitivity and a willingness to 
cooperate. Public housing officials must carefully 
work with community groups to educate community 
residents about the differences between large, hi-rise 
public housing and scattered site housing. They must 
encourage community participation in site selection 
and work with responsible community groups to 
establish realistic and effective tenant selection criteria 
and procedures. And public officials, particularly 
those elected to office, must exercise a moderating 
influence rather than an inflammatory one; they must 
serve as leaders, calling upon the better instincts of 
their constituents, rather than exploiting the darker 
side. 

If public housing agencies do not become more 
professionally managed, proving their ability to main- 
tain and manage large amounts of residential property, 
and if they do not become more sensitive and 
responsive to responsible community input, public 
housing may itself become a thing of the past. And 
without public housing, where will our poor and lower 
income people look for housing? 

There is an obvious need for far greater financial 
support for public housing, both for better mainte- 
nance and security of existing projects, and for 
construction and rehab of additional public housing 
through scattered site development. However, the 
time has passed when governmental agencies could 
demand large funding without adequate evidence of 
not only need but proper management. Supporters of 
public housing (as well as subsidized housing) must 
demand more accountability by those who control it. 
The waste and incompetence must be identified and 
rooted out. Competent and committed people within 
must be rewarded and encouraged, and others brought 
into the system with assurances that the system will be 
overhauled. The time is short, so little confidence 
exists now, that unless decisive action is taken soon, 
the public may refuse to support public housing 
regardless of promised reforms. 

Tighter Regulation of the Private Multi-family 
Housing 

We must begin in our effort to crack down on those 
who willingly contribute to building deterioration by 
establishing priorities. We must separate the instances 
of technical but non-hazardous and non-harmful code 
violations from those which are genuinely harmful or 
important to the continued integrity of the building. 



100 



We must also distinguish between owners who are 
themselves victims (whether of the economy or of 
other forces beyond their control) and those who have 
a pattern of exploiting buildings and tenants. 

In each of the former cases, the local governmental 
response should be supportive, providing technical as 
well as financial assistance, and in appropriate in- 
stances, waiving enforcement of violations all together. 
The technical assistance may involve not only assis- 
tance in obtaining financing and in the rehab process 
itself, but also in such areas as energy conservation, 
tenant selection and education, the eviction process, 
the economics of building management and mainte- 
nance, etc. 

In the latter cases, we must look to enforcement 
measures, punitive measures, particularly where the 
owners or managers have shown a disregard for their 
responsibilities. These measures should be reserved for 
those buildings and those operators which present the 
most serious threat to our housing and neighborhoods. 
Among the criteria should be the seriousness of the 
conditions to the health and safety of residents and 
neighbors, the seriousness of the conditions to the 
continued viability of the building, and the pattern of 
operations by the owner and manager. Specifically, 
where there is a clear pattern of large scale owner- 
ship/management combined with mismanagement or 
deterioration, strong enforcement should be the rule. 
Where there is evidence of arson-for-profit, intentional 
milking of buildings or other indications of slumlor- 
dism, every legal weapon should be utilized to the 
utmost. 

These weapons should include the issuance and 
collection of large fines, an effective receivership 
program geared toward saving salvageable buildings, 
support of responsible tenant oriented reforms , 
regulation of rent gouging in a way that encourages 
building maintenance, jail terms where appropriate 
and even the removal of property from slumlord 
ownership in the most serious cases. Enforcement 
must be coordinated between city code enforcement. 
Criminal Housing Management Act prosecutions, 
arson-for-profit prosecutions, and tax delinquency 
prosecutions. We must also devise additional creative 
strategies which are as sophisticated, as far reaching 
and as tough as the operations which we seek to 
control. 

Weapons must also be developed to combat the 
process of speculation, whether through removal of 
economic incentives, or other methods. So-called anti- 
speculation taxes have been enacted in other parts of 



the country with controversial results. If those mea- 
sures are found ineffective or counter productive, 
other solutions must be devised. 

Realistic regulation covering condominium conver- 
sions and rent gouging must be found. Condo and co- 
op conversions can be positive elements in the effort to 
provide decent and affordable housing, but without 
regulation they become weapons to inflate housing 
costs for short term profit. Laws must be enacted 
which encourage responsible investment, protect ten- 
ants' rights and prevent unreasonable or unnecessary 
inflation of housing costs. The rising cost of housing is 
directly related to the aggravation of the dual housing 
market, and it must be combatted. 

A new generation of laws which both regulate rents 
and encourage responsible building maintenance have 
been enacted in major metropolitan areas across the 
country. These laws differ from old-style rent-control 
laws in that they permit landlords to pass on legiti- 
mate maintenance, energy and other costs, while 
protecting tenants from rent gouging. Research has 
disputed the claims of the real estate industry that 
such laws lead to the deterioration or disinvestment 
associated with the old-style rent control laws. Such 
regulations should be examined for their applicability 
to Chicago. If there are problems with existing 
models, then other methods for preventing rent 
gouging must be found. Excessive rents tend to be 
associated with bad maintenance and they directly 
contribute to the lack of choice which forces low and 
moderate income tenants into substandard housing. It 
is that lack of choice which helps to maintain the 
market for such housing and to keep slumlords and 
speculators in business. 

We must also end the distrust between community 
groups and government, and replace it with a spirit of 
cooperation. But this will be possible only when 
government ceases to be defensive and secretive about 
its programs and procedures. Community groups 
should be provided maximum access to information 
which will assist them in their efforts to preserve 
housing in their neighborhoods. And governmental 
units must actively solicit the input of experienced 
community groups and community leaders to improve 
current programs and to develop new ones. The battle 
for decent and affordable housing should be one in 
which government and community groups are allied. 

Conclusion 

If we are to achieve decent and affordable housing 
for all, we must put slumlords out of business, remove 



101 



the incentives for speculators, and enact and enforce To do all of these things, we must shed our old 

laws to hold housing costs down, protecting both good habits and assumptions, and the programs based upon 

landlords and good tenants. We must clean up our them. The housing crisis in which we find ourselves 

governmental programs, especially our public housing will not be eradicated or even reduced by timid 

programs, eliminating waste and incompetence. We approaches. Minor adjustments in present programs, 

must provide sufficient funding to provide for safe and masked by rhetoric or other PR devices, will only use 

decent housing in existing projects and to greatly up precious time during which the crisis will deepen, 

expand the scattered site program, under the condi- Our only hope is to be bold and creative, slaying 

tions of responsible community input described earli- sacred cows where necessary, in our search for 

er. genuinely effective housing programs. 



102 



The Dual Housing Market in Chicago 

by Joyce E. Tucker, Director, Illinois Department of 
Human Rights 

Introduction 

The Illinois Department of Human Rights and the 
Human Rights Commission were created by the 
passage of the Illinois Human Rights Act, and became 
effective July 1, 1981. 

It is an Act to promote the public health, welfare 
and safety of the people of the state of Illinois by 
preventing unlawful discrimination in employment, 
real property transactions, access to financial credit 
and public accommodations by authorizing the cre- 
ation of the Department of Human Rights to enforce, 
and a Human Rights Commission to adjudicate, 
allegations of unlawful discrimination, and by making 
uniform the law, with reference to unlawful discrimi- 
nation through the addition, amendment, and repeal 
of various acts. 

Prior to the passage of the Human Rights Act, 
Illinois did not have a Fair Housing Law. 

It will be the purpose of this paper to explain the 
Human Rights Act, as it relates to housing and related 
areas of housing based upon research of various 
reports and publications that address housing issues. 

Redlining 

Redlining began with the practice of mortgage 
lenders sectioning areas of a map in red. These areas, 
which were often minority or mixed neighborhoods, 
were denied mortgage and home improvement loans. 
Redlining for the most part is still widely practiced in 
Illinois. 

Mortgage lenders, in their belief that when minori- 
ties moved into a neighborhood property values 
decline, direct their loans away from the inner-city to 
more "stable" neighborhoods and suburban areas. The 
effect on the older urban communities is the abandon- 
ment of buildings and the deterioration of the neigh- 
borhood. Homeowners in their areas who wish to sell 
their homes usually find that they are unable to. In 
many cases, they end up renting their properties and 
rarely invest any money in their maintenance. Resi- 
dents who remain, or move into an area that has been 
redlined, find that they are unable to obtain loans to 
improve their homes. With loans unavailable, proper- 
ties steadily deteriorate and the area becomes blighted. 



Communities that cannot obtain conventional loans 
become dependent upon government insured loans 
such as those offered by the Federal Housing Authori- 
ty (FHA) and the Veteran's Administration (VA). 
Before 1968 these loans went to young families who 
did not qualify for conventional loans and who were 
seeking homes in the newer suburbs. 

The federal government entered the housing field 
when judicial enforcement of racial covenants was in 
effect; city planners were firmly committed to the 
belief that the homogeneous neighborhood was the 
ideal in urban living, and the myth that non-white 
occupancy lowered property value was a cardinal 
article of faith among realtors, home builders, and 
lending institutions. Federal housing officials, drawn 
from those same ranks, threw the full weight of 
government acceptance behind residential segregation. 
FHA began its career by making clear the undesirabil- 
ity of mixing different social and racial groups. Racial 
restrictive covenants were required for every property 
on which FHA extended loan insurance. Its under- 
writing manual, which set a national standard for 
residential design and construction, furnished builders 
and lenders with a model race restrictive covenant for 
their guidance and use. 

In 1948, after the Supreme Court had struck down 
judicial enforcement of its racial covenants, FHA 
changed its policy to a natural course and ceased the 
official advocacy of racial segregation. Private builders 
and massive suburban developers alike, however, 
continued to obtain FHA-insured loans to construct 
racially restricted housing. 

By December 31, 1959, FHA-insured mortgages 
and loans amounting to more than $61,000,000,000 
had been advanced to private lending institutions and 
builders in the United States. Of this amount, $41.4 
billion was involved in the financing of 5,272,000 
home mortgages, $7.3 billion in multifamily projects, 
and $12.4 billion in 23,357,000 property improvement 
loans. It was estimated that less than 2 percent of the 
new construction made possible by these funds was 
available for occupancy by black American citizens. 

After 1968, FHA regulations changed to allow 
homes to be certified for FHA insurance without 
reference to the condition of the surrounding neigh- 
borhood. This opened up older, partly run down 
urban neighborhoods to FHA backed loans, which 



103 



resulted in an increase of urban insured loans by 
FHA.' 

The problem which arises with this policy is that 
lending in these areas becomes dominated by FHA 
insured loans instead of savings and loan institutions. 
Mortgage associations, operating in these areas, invest 
little capital of their own, and do not hesitate selling 
the FHA backed mortgage to a secondary market 
investor, usually the Federal National Mortgage 
Association (Fannie Mae). These mortgage bankers 
have little interest in the viability of their loans and 
can often undermine sound mortgage lending prac- 
tices. Properties are often over-appraised and structur- 
al deficiencies ignored. Homeseekers with poor credit 
and low incomes can be sold homes beyond their 
ability to pay. Many times foreclosure is initiated 
resulting in abandoned homes waiting eligibility for 
resale and subject to deterioration from vandals and 
lack of maintenance. 

Conventional loans remain the most important 
factor in maintaining and upgrading communities and 
there is strong evidence that most banks and savings 
and loan associations continue their practice of deny- 
ing loans to older neighborhoods. The National 
Training and Information Center published a report in 
1978 based on information obtained through the 
Federal Home Mortgage Disclosure Act. The report 
showed that most mortgage money was going into 
middle-class suburban areas. Relatively little was 
invested in older racially mixed, low income areas. 
One-half of all the census-tract areas in the Chicago 
metropolitan statistical area, mostly in the second ring 
of suburbs, received 87 percent of all conventional 
residential mortgages, leaving little residential mort- 
gage money for the city of Chicago.^ 

Lenders argue that the low level of conventional 
loans reflect the fact that there is less demand for such 
lending in most urban areas. They further state that 
the risks in those areas are too high for home purchase 
or improvement loans which would insure a good rate 
of return for their disposition. Sound lending and 
investment practices, they argue, cause a lower rate of 
investment in older communities. Because of the 
perceived high risk and the reluctance of lenders to 
invest in older neighborhoods, the deterioration of the 
homes in a community is inevitable. Unless much 
needed capital is invested in our central city neighbor- 



' Gertrude S. Fish, The Story of Housing, Mac Miller Publishing 

Co., 1979. 

' lUinois Issues, "Redlining, A Black and White Issue," July, 1979. 



hoods, the problem which exists in our older neighbor- 
hoods will continue. 

High Interest Rates 

Many banks and savings and loan associations 
claim that they are more willing now to end past 
redlining practices and make more mortgage and 
home improvement loans in older neighborhoods; but, 
this change in policy has not been effective because 
few city residents can afford loans carrying interest 
rates as high as 18 percent. Some lending institutions 
have become more responsive because of pressure 
from fair housing groups, but high interest rates have 
had a negative effect on their efforts. 

Soaring interest rates have had an adverse effect on 
mortgage and home improvement loans. By raising 
the cost of money, the amount of funds institutions 
have to lend is limited, and the higher interest rates 
that lenders must charge to make a profit are higher 
than most potential customers can afford. Conse- 
quently most recent mortgage loans in Chicago have 
been going to northside lakefront buildings. 

Recently the FHA and VA lowered their mortgage 
insured loans to 15 percent. Hopefully, this will have a 
positive effect on lowering of conventional mortgage 
interest rates. However, even with interest rates at 15 
percent, they are still out of the reach of many lower 
income families and will have to come down a few 
more points before the majority of low income families 
can afford them. 

Steering 

In 1924, the National Association of Real Estate 
Boards adopted, as part of its code of ethics, the 
following declaration: 

A Realtor should never be instrumental in introducing into a 
neighborhood. . . .Members of any race or nationality, or 
any individual whose presence will clearly be detrimental to 
property values in that neighborhood. 

Realtors drew up and spread the use of restrictive 
religious and racial covenants, placing vast distances 
between the black slums of the ghettos and the 
affluent and lilly-white urban and suburban areas. The 
legacy is still with us today.' 

In Shelly vs Kramer. 1948, the Supreme Court ruled 
that a restrictive covenant — one preventing owners of 
property from selling it to blacks or members of the 

' Morris Milgran, Good Neighborhood. The Challenge of Open 
Housing. W.W. Norton and Co.. 1979. p. 27. 



104 



other groups could not be enforced in the courts. In 
1962, by executive order, it was decreed that discrimi- 
nation in renting or selling housing built under 
government subsidy or with the assistance of govern- 
ment-guaranteed mortgages would not be allowed. 
The Fair Housing Act of 1968 extended the ban on 
discrimination because of race, color, religion, or 
national origin to all housing except for a sale by the 
owners of individual homes or rental of a room or 
apartment in a house in which the renter lived. The 
ban extended to the actions of the real estate industry, 
to the lenders of funds, to advertising.^ 

To the National Association of Real Estate Boards 
(NAREB) and its members, the housing market was 
really two markets — white and black; the white 
market was cultivated and the black market ignored. 
While the policies of the NAREB have changed 
significantly over more recent years, to the point 
where the organization now supports the federal fair 
housing laws, the effects of its past policies in fostering 
residential segregation remain with us. 

Private builders, while not as outspoken on the 
necessity of residential segregation as NAREB, none- 
theless, acted in accordance with the separate market 
principle. Thus in the post World War II housing 
boom of the 1940's and 1950's, giant subdivisions were 
built from which minority families were excluded. The 
only new housing available to minorities consisted of a 
comparatively small number of units rented in minori- 
ty enclaves designated for minority occupancy.' 

In a 1979 report by the U.S. Department of 
Housing and Urban Development, Measuring Racial 
Discrimination in American Housing Market, the 
summary and conclusion reported: 

In short, the study reveals extensive discrimination, al- 
though the level and nature of discrimination clearly varies 
among regions and sites. The absolute magnitude of the 
problem is less important than the fact that unequal housing 
opportunities that are solely the result of race still exist." 

Despite fair housing legislation, the dual housing 
market still exists in most communities in Chicago, 
and the suburban areas remain segregated. 

Blockbusting (panic peddling) 

Blockbusting (panic peddling), is very closely relat- 
ed to racial steering. Often times when a community is 



' Nathan Glazer, Affirmative Discrimination. Ethnic Inequality and 

Public Policy. Basic Books, Inc., 1978. p. 133. 

" Understanding Fair Housing. U.S. Commission on Civil Rights, 

February. 1973. 

' U.S. Department of HUD, Measuring Racial Discrimination in 

American Housing Market, p. 202. April, 1979. 



"designated" as a minority area, or if minorities move 
into an area, brokers will use panic peddling methods 
as part of their selling practices. In order to create 
alarm among residents of a community, brokers will 
make statements or distribute written material inform- 
ing residents that minorities are moving into the area 
and that they should sell their properties before the 
values go down. 

White homeowners who become fearful that the 
neighborhood is "changing" will begin selling their 
homes and move. Brokers who created the alarm will 
begin steering minorities into the community in 
increasing numbers, until it becomes re-segregated. 

Whenever communities change in this fashion, the 
white homeowner loses and the minority home-buyer 
loses. The only ones that profit are the brokers who 
gain commissions through the sale of the homes. 

Integration Maintenance (Quotas) 

Although the tendency of ethnic groups to live 
among their own people has often led to voluntary 
segregation, the segregation of black Americans in 
urban ghettos has been involuntary because of their 
systematic downgrading by whites as well as by their 
subsequent inability to compete economically for 
better and more expensive living quarters.' 

One major result of keeping a substantial portion of 
the black and minority population out of white 
neighborhoods is the creation of uniracial areas or 
ghettos. This, in turn, stimulates the channeling of 
heavy minority demand into the few areas in any 
metropolis where minority families are really wel- 
come, and in this way once-open communities may 
acquire a heavy minority status. To counteract this 
trend, quotas have been used by some builders, 
especially before the fair housing laws were passed. 

Today some builders and apartment house owners 
may secretly use a benign quota in order to include 
blacks in the housing market without running the risk 
of turning their community into an all minority area.' 

Exclusion of Children 

In a tight rental market it has been found that 
families with minor children are frequently discrimi- 
nated against in the rental and occupancy of housing. 
According to recent studies these families experience 

Morris Milgran, Good Neighborhood. The Challenge of Open 
Housing. W.W. Norton and Co., 1979, p. 89. 
' Ibid., p. 90. 



105 



special difficulties because landlords are imposing 
restrictions on the tenancy of minor children. 

For example, an article appearing in the Harvard 
Law Review stated that: 

Families searching for rental housing often find more than 
one-half of the vacancies closed to them; exclusion rates as 
high as 71% are not unknown. Landlords who rent only to 
adults defend their practices on a number of grounds: It is 
more expensive to rent to families, children are noisy and 
bothersome, and adult only apartments command higher 
rents. Whatever the landlords' reasons for excluding chil- 
dren, it is clear that a tight market is what permits them to 
act on their preference.' 

Illinois is among eight states and the District of 
Columbia that have enacted laws prohibiting the 
discrimination against the exclusion of children in 
rental housing (111. Rev. Stat., Chap. 68, Section 3-104 
et seq.). But the scarce housing market among other 
socioeconomic factors such as low vacancy rates, 
which are about 1.8 percent in the city of Chicago,'" 
coupled with the ever increasing high cost of rental 
units, allows landlords to be more selective in their 
rental policies. {Chicago Tribune: 10-18-81) 

The Comptroller General of the United States also 
concedes that "while median rents have increased by 
an average of 9.6 percent annually (1973-77), renters 
incomes have only increased by an average 5.6 percent 
annually." 

Another factor which contributes to the vacancy 
rate decline is the ever increasing condominium 
conversion with new construction virtually non-exis- 
tent." It is felt that while the social and economic 
forces are accelerating, the growth in children exclu- 
sion policies are not quite fully understood. Landlords 
might exclude families with children because of the 
children's mischievousness, boisterousness and rowdy- 
ism." 

A more convincing reason for the exclusion of 
children policy was found to be the financial advan- 
tage to landlords with "adults only" rental policies. 
These advantages include lower maintenance costs 
associated with renting to families without children." 

The economic arguments of why the exclusion of 
children is a common practice among landlords is only 
used as a facade for overt racial and sexual discrimina- 



' "Why Johnny Can't Read," 94 Harvard Law Review, pp. 1829- 

49, 1981. 

'" Ibid. 

" Comptroller General of the United States, Report to Congress; 

Rental Housing: A National Problem That Needs Immediate 

Attention. 

" Flowers vs. John Bumham & Co., 212 Call, app 3D, 703, 98 Cal 

Reporter, pp. 644, 645, 1971. 



tion as is succinctly cited in the Harvard Law Review 
article''' which states; 



The debate over exclusionary practices had been intensified 
by the claim that discrimination against families with 
children serves as a "smokescreen" for racial and sexual 
discrimination; It is certainly true that families headed by 
minorities and women are particularly affected by exclusion- 
ary practices because of their proportionately greater repre- 
sentation among renter families than among families in 
society as a whole. 



It seems unlikely, however, that a uniformly applied restric- 
tive practice would prove an effective way of intentionally 
discriminating against minorities or women. Too many 
families with white male householders have children, and 
too many minority and single female householders have no 
children, to make such a practice an effective screen. It is 
possible that some landlords give the presence of children in 
the family of a minority or female householder as the reason 
for a decision not to rent to that family, but employ 
exceptions to the policy to accept white male householders 
with children. This claim is at once more serious and more 
difficult to prove. In some cases, though, complaints of 
discrimination against a family because of its children have 
led to discovery of evidence that racial or sexual bias was 
also a motivation of the landlord. 

We, nonetheless, will have to agree simply because 
women and minorities will reasonably make up a 
substantially greater number of households that would 
be in the rental market than the white male house- 
holds. Consequently the adverse impact on this group 
being excluded from rental housing, will be more 
evident. 

There are cases where complainants have called the 
agency to ask whether or not they can conceal the fact 
that they have children after they have experienced 
numerous rejections for housing accommodations. We 
have also been told of cases where families had to send 
their children to live with relatives until adequate 
housing could be found." 

In recent months there have been articles reported 
in the Sun-Times and Chicago Tribune about a family 
with seven children, who had to sleep in their car in 
Lincoln Park because they could not find landlords 
that would rent to them because of their children. 
Greene and Blake, in their national study, also found 

" Ibid. 

" Ibid, p. 1836. 

" Green J. and Blake, GP, How Restrictive Rental Practices Affect 

Families with Children. 



106 



that this form of non-traditional living also occurs in 
other areas of the country: 

During the past year, 6.9 percent or thirty-eight of the 
respondents had hved in a non-traditional circumstance. 
Four had hved in a car, three in a van, three in an 
abandoned building, and nine had camped out. Two of this 
group had combined experiences. Thirteen respondents 
reported living in motels and two in hotels for extended 
periods of time. Over half of these had lived in these non- 
traditional situations for over a month, three for six to 
twelve months and two for over one year." 

There is an urgent need in the city of Chicago for a 
sufficient amount of structurally sound housing which 
will adequately provide for the physical needs of its 
occupants." The existing supply of sound housing is 
often occupied under overcrowded conditions. As one 
single household family said: 

Because I'm single with kids they don't have any good 
housing for us and they just don't care where they put you. 

Thus we have seen that the exclusion of children 
discrimination is an issue that will be paramount to an 
effective enforcement effort. 

Public Housing 

The Chicago Housing Authority (CHA) is the 
nation's second largest public housing authority. The 
CHA has three housing programs: The Family Hous- 
ing Program, which is CHA owned apartments for 
general occupancy; the Elderly Housing Program, 
which is CHA owned apartments, especially designed 
for occupancy by elderly persons; and the Section 8 
Housing Assistance Payment Program, which assists 
low and moderate income families and elderly persons 
to rent apartments of their own choosing in privately 
owned buildings and pays part of the rent." 

The Family Housing Program has 30,398 apart- 
ments which provide housing for 1 18, 100 persons. The 
Elderly Housing Program accommodates 19,484 per- 
sons in 16,198 apartments. The Section 8 Program 
assists 1 1,400 persons in 5,200 apartments." 

Recently the CHA has issued $15.9 million in 
contracts for construction and rehabilitation of 438 
housing units under its scattered site program. The 
CHA's New Development Program began a year ago 
as a result of the settlement of 1 3 years of litigation, in 



Ibid. 

Ibid. 

CHA Facts, 1980. 

Ibid. 

Chicago Sun-Times. October 8, 1981. 



the Gautreaux housing discrimination suit. During 
those years, virtually no public housing was built. ^° 

In an October 19, 1981 Chicago Sun-Times newspa- 
per article, Chicago Housing Authority Executive 
Director, Andrew J. Mooney, was reported as saying 
that a Reagan Administration proposal to reduce 
subsidies to public housing authorities could spell 
disaster.^' 

The CHA has long been troubled by a growing gap 
between expenses and income, including the rent its 
tenants can afford, and federal aid. It was able to 
balance its fiscal 1981 and 1982 budgets through 
employee layoffs and other cost-saving measures. The 
1982 budget, however, was based on the authority 
receiving 100 percent of the HUD funding formula." 

Housing Stock 

According to the Metropolitan Housing and Plan- 
ning Council, construction and demolition in the past 
decade have been changing the character and scale of 
Chicago's neighborhoods. The city's typical and gen- 
erally affordable 2-4 flats and small walk up apart- 
ment buildings, which provided 70 percent of all 
rental stock in 1975, are rapidly being demolished, 
especially in the inner-city. These buildings are being 
replaced primarily by larger, more luxurious high cost, 
high rise buildings along the lakefront." 

This indicates that the majority of capital being 
invested in housing is going into housing that most of 
the inner-city families being displaced by the demoli- 
tion of older housing units cannot afford. Most new 
construction in the city was in buildings over 8 units, 
concentrated heavily along the northside lakefront, 
and primarily in high rise buildings. Units lost 
through demolition of buildings over 8 units amount- 
ed to over 20,000 throughout the city, and because of 
the location of heaviest losses in south and west side 
inner-city community areas, was probably in large 
walk-up or courtyard buildings. In areas where heavy 
demolition has occurred, and vacant lots become more 
abundant, market demand for new housing is not 
sufficient to support new construction at the high cost 
it now demands. Consequently, the only new construc- 
tion in these areas is heavily subsidized. Most new 
construction in the city has been on the far northwest 
and southwest sides and the north and near south 

" Chicago Sun Times. October 19, 1981. 

" Ibid. 

" Planning Reporter. Metropolitan Housing and Planning Council, 

June. 1981. 



107 



lakefront. These areas are predominately white and/or 
middle income areas." 

Condominium Conversion 

Conversion of rental properties to condominiums or 
cooperatives can have various impacts on the commu- 
nities and neighborhoods in which they occur, on the 
renters whose units are converted and on the house- 
holds that occupy converted units." 

In the past decade, condominium conversion greatly 
changed the rental ownership balance in a number of 
neighborhoods. Although condominium conversion 
has increased the number of units available to owner- 
ship for those who can afford it, it has been criticized 
by community groups as being responsible for higher 
housing costs, displacing renters who have lived in an 
area for many years, and diminishing the overall 
supply of rental housing in the city. The greatest 
conflicts between old and new residents are rising 
housing prices and rents which result in the displace- 
ment of former residents who found that they could 
no longer keep up with the improvements to their 
community. 

The city Department of Planning estimated in 1978 
that the number of condominiums in Chicago was at 
51,800 or 4.3 percent of the 1980 total estimated 
housing stock in the city. Conversions in the past 
decade have been mostly lakefront communities, but 
with the increasing cost of managing rental units this 
trend could continue. 

Gentrification of Older Neighborhoods 

The rehabilitation of older inner-city housing by 
middle and upper middle class professional people, 
sometimes referred to as gentrification, has had a 
somewhat mixed impact on some sections of some 
neighborhoods. 

The influx of these young professionals has had 
certain positive effects, as well as negative, on commu- 
nities. When sections of a community are rehabilitat- 
ed, the property values as well as the rents skyrocket. 
This obviously eliminates many of the former resi- 
dents who have low incomes from renting these 
apartments, forcing them to seek housing in areas that 



they can afford. In addition, because of the increase of 
property values in the area, taxes also increase often 
times placing a financial burden on poorer home- 
owners in the area. 

It is obvious that inner-city neighborhoods are in 
need of the capital improvements that this process 
involves, but, like the mass urban renewal program of 
the past, it is the poor and minority persons who are 
adversely affected, causing the upheaval of poor and 
minority families and forcing their relocation into 
similar, but more congested, patterns of segregation. 

Summary and Conclusion 

Even though there have been numerous laws passed 
in an attempt to eliminate discrimination, there 
remains in Chicago discrimination which must be 
overcome. 

Some progress has been made, especially in the 
areas of employment and public accommodations. We 
no longer see the blatantly discriminatory employment 
practices and segregated public accommodations that 
existed in the past, although much work is still needed 
in these areas. 

Housing, however, has much further to go. Despite 
the fact that the minority population has grown 
significantly, the dual housing market and segregated 
housing patterns are much the same as they were 
thirty years ago. Every gain in ending segregation in 
housing has been a difficult one. Litigation in housing 
cases can go on for many years. Recent court 
decisions, however, offer some hope that fair housing 
efforts will be successful in years to come. 

The recently passed Illinois Human Rights Act, 
which gives the Department of Human Rights the 
authority to investigate charges of discrimination in 
the areas of employment, real estate transactions, 
financial credit, and public accommodations will 
enable the Department to advance the cause of civil 
rights in the state of Illinois. 

But, if integrated housing is to succeed, it will need 
more than laws and litigation. What is needed is the 
cooperation and goodwill of every aspect of the 
housing and financial industries, as well as the 
members of our communities. 

" Ibid. 



108 



The Role of the State in Housing Policy 

by Michael Spivey, Assistant to Gov. James R. 
Thompson 

While the state of Illinois has a long record of 
involvement in housing issues, the predominant role in 
the development of housing policy belongs to the 
federal government and in turn, their partners, local 
governments. For its part, the state has served three 
functions in the housing area: 

• administration of federal programs and techni- 
cal assistance to local governments. 

• development of new housing units (through the 
sale of tax-exempt bonds); and 

• policing of housing discrimination. 

These functions are served by the Department of 
Commerce and Community Affairs (DCCA), the 
Illinois Housing Development Authority (IHDA), 
and the Department of Human Rights (DHR), respec- 
tively. I would like to briefly outline the evolution of 
the role of the state of Illinois in housing policy, 
including the efforts of these agencies, and conclude 
by relating this general discussion to your primary 
concern — that of the dual housing market. 

The Mann Commission 

The Mann Commission was a bipartisan commis- 
sion created by the Illinois General Assembly in 1965 
to investigate "the availability of additional low 
income or public housing for all citizens of Illinois in 
need thereof"' As such, the Commission was perhaps 
the greatest single effort by the state to that point to 
create a comprehensive housing policy. 

Indeed, the findings by the Commission were 
detailed and extensive. In its summary statement the 
Commission found that: 

The catalogue of abuses and public and private neglect is so 
lengthy that to accept the proposition that the state cannot 
play a more active and determined role in, for example: 

• stimulating the construction and rehabilitation of decent 
housing for low income families; 

• correcting landlord abuses; 

• enforcing modem and realistic building and housing 
codes; and 

• creating an open housing market, is to relegate state 
government. . .to a ministerial function in society. . . .' 



' Mann, Robert E., et al. Legislative Commission on Low Income 
Housing — For Belter Housing in Illinois (Springfield, 1967) p. 9. 



In response to these situations, the Mann Commis- 
sion went on to recommend several courses of action. 
One recommendation was that a state department of 
urban affairs be created to include the then State 
Housing Board in order to expand the role of the state 
in housing. The new department would have not only 
responsibility for the planning, development, and 
coordination of public housing in Illinois but would 
also have the authority to issue tax-exempt bonds for 
the purpose of construction and rehabilitation of low 
and moderate income housing. 

The Commission also examined problems of fair 
housing with recommendations for outlawing both 
segregation in public housing and for using the state's 
licensing power to prevent block-busting by real estate 
operators. 

Many of the recommendations of the Mann Com- 
mission were subsequently implemented, although in a 
somewhat different fashion from the original recom- 
mendations. 

The Department of Commerce and Community 
Affairs 

Shortly after publication of the Mann Report, the 
Illinois General Assembly acted to create the Depart- 
ment of Local Government Affairs (DLGA). Within 
the DLGA was placed the Office of Housing and 
Buildings. Ironically many of the functions which the 
Mann Commission intended for the new housing 
agency were not included in DLGA-OHB. For 
example, the power to issue mortgage revenue bonds 
was legislated, but it was placed within the Illinois 
Housing Development Authority. Further, the recom- 
mendation that the new state agency provide direct 
subsidies to low income persons through a rental 
assistance program was not acted upon. As a result, 
the greatly expanded role for the state in housing 
policy, foreseen by the Mann Commission, did not 
come about. 

However, that is not to say that DLGA and its 
successor agency, the Department of Commerce and 
Community Affairs, have not served an important, 
integrative function in housing. DCCA's ongoing 
Illinois areawide project, for example, is one of the 
most ambitious efforts in the nation to coordinate 
multiple funding sources and multiple levels of gov- 
ernments for the purpose of creating new housing, 
rehabilitative housing, and providing public facilities. 

' Ibid., p. 1. 



109 



In addition to the areawide project, the Department 
provides housing assistance to Illinois citizens and 
communities through a number of other programs. 
Among these are: 

• General Planning and Development Assistance. 
One of DCCA's major activities is assisting local 
governments and public and not-for-profit agencies 
in addressing housing problems and needs. Assis- 
tance is provided in the preparation of applications 
for federal housing funding and the preparation and 
enforcement of fair housing ordinances and guide- 
lines with an emphasis on housing for the low 
income and elderly. 

• Housing Technical Assistance. DCCA also pro- 
vides technical assistance to local housing authori- 
ties in application for federal funding, addressing 
management issues, and addressing affirmative ac- 
tion concerns. 

• Section 8 Moderate Rehabilitation. DCCA has 
been allocated 353 units of Section 8 subsidies in 
order to facilitate moderate rehabilitation. To date, 
250 have been rehabilitated throughout the state. 
As was mentioned earlier, authority to issue tax- 
exempt mortgage revenue bonds was granted to a 
quasi-public agency, the Illinois Housing Develop- 
ment Authority. 

The Illinois Housing Development Authority 

IHDA was created in 1967 to "make loans for the 
construction and rehabilitation of housing and com- 
munity facilities, acquire and develop land. . .and as a 
means of encouraging home ownership, make loans to 
and purchase residential mortgages from private 
lending institutions.'" 

With respect to the crucial question — who is to 
occupy IHDA-financed projects — the Illinois Housing 
Development Act stated: 

The Authority shall formulate regulations. . .setting forth 
criteria for tenant selection plans. . .the income limits shall 
be sufficiently flexible to avoid undue homogeneity. 

In order to. . .achieve rent charges which will make units 
available to persons and families of low income at low 
rentals, the Authority and a mortgagor may use devices 
including, but not limited to, direct rental assistance in the 
form of partial rent subsidy from any county, municipal. 
State or federal source. . . . 

The Authority shall require that occupancy of all hous- 
ing. . .assisted under this Act be open to all persons. . . .' 



Illinois Revised Statues, Chapter 67 1/2, Section 301 ff. 
Housing Policies and Programs for Illinois, p. 23. 



Thus, the mandate to IHDA was broad and clear. 
IHDA was to: "help to produce housing, produce it 
for people of low and moderate incomes; find out 
where it is needed and put it there; make it attractive 
and accessible; make sure that it is open and available 
to people regardless of race; make certain that poor 
people have a chance to live in the housing, with rent 
subsidies from all possible sources, but make certain 
that occupancy is diversified."' 

By objective standards, in terms of both quality and 
quantity, IHDA has been a success. IHDA has 
produced more than 17,000 units of racially integrated 
housing. Occupancy data show IHDA's commitment 
to equal housing opportunity. 

To date, IHDA has financed mortgage loans in 28 
counties. The total population in these counties is 9.6 
million of which 2.1 million (22.8%) are minority. Of 
IHDA's 16,800 units, 21% are minority occupied. 

The reason for these numbers is to be found in 
IHDA's aggressive affirmative marketing policy. 

The substance of IHDA's affirmative marketing 
policy is found in Title VIII of the Civil Rights Act of 
1968, the Illinois Human Rights Act and the loan 
documents which are issued to finance the develop- 
ments. The policy is communicated to the owner of 
the development, the development team, the manage- 
ment agent, and the community in which the develop- 
ment is to be located. 

After initial application submission, the owner is 
notified in the site and market letter and the IHDA 
processing guide that close cooperation with the 
Authority's equal opportunity staff (Division of Labor 
Standards and Affirmative Marketing) will enable him 
to meet the requirements of the Authority's Equal 
Housing Opportunity policy. Soon after receipt of the 
letter, the owner, the development staff, and the Labor 
Standards and Affirmative Marketing staff meet to 
discuss submission of the Affirmative Marketing Plan. 
The plan encourages the development staff to analyze 
the potential market to determine the housing needs of 
all segments of the population in the development 
area. The analysis should reveal which groups are not 
housed in decent, safe and sanitary units or are least 
likely to apply for residency under normal conditions 
and thus should be encouraged through direct out- 
reach to apply to the new development. Frequently, 
community-based housing groups are included in the 

' Ibid., p. 23. 



110 



outreach efTorts which are to be made during the 
period of construction prior to rent-up. 

After submission of the plan, the developer and the 
Labor Standards and Affirmative Marketing staff 
maintain contact on an informal basis until the Pre- 
Occupancy conference. This conference can occur 
during the construction of the development or at least 
90 days prior to the start of marketing. This confer- 
ence is held to review the Affirmative Marketing Plan 
for revisions based upon changes in the community 
structure or changes in the marketing approach of the 
development. The meeting serves to acquaint IHDA 
staff and the development staff with the mutual goals 
to be met in the marketing period. 

From that point on, the development is monitored 
by IHDA to determine whether the Affirmative 
Marketing goals are being met. Monitoring does not 
stop with 100 percent rent-up, but is continued 
throughout the term of the mortgage by visits of the 
IHDA housing management officer and the Affirma- 
tive Marketing staff. Also, the Labor Standards and 
Affirmative Marketing staff answer phone inquiries 
and hold seminars for the development staff which 
give fair housing instruction on tenant selection 
criteria, eviction procedures, and community re- 
sources. 

In addition to efforts by IHDA to spread the fair 
housing philosophy, the Department of Human 
Rights has the predominant role in this regard as well 
as responsibility for policing of housing discrimina- 
tion. 

The Department of Human Rights 

The Department of Human Rights was created in 
1979 with the passage of the Illinois Human Rights 
Act. Article 3 of the Act makes it a civil rights 
violation to unlawfully discriminate against a person 
in "the sale, exchange, rental, or lease of real 
property."' Article 3 is thus similar to Title VIII of 
the Civil Rights Act of 1968 except that it expands on 
Title VIII to prohibit housing discrimination because 
of children, marital status or handicap. 

Since operations began on July 1, 1980, the Depart- 
ment of Human Rights has docketed 86 housing 
complaints. Recent months have witnessed a sharp 
increase as a result of efforts to publicize the Human 
Rights Act with various fair housing groups. 

In addition to investigating charges filed by individ- 
uals who feel they have been discriminated against in 



housing, the Human Rights Act allows the Depart- 
ment to initiate a charge against any entity that is 
discriminating in a pattern and practice fashion. This 
power of initiation is important in the effort to 
eliminate the dual housing market. 

State Housing Policy and the Dual Housing 
Market 

Despite the findings of the Mann Commission, and 
the efforts of DCCA, IHDA, and DHR, the dual 
housing market in Illinois continues to exist. In fact, 
in many areas the dual housing market and segregated 
housing patterns are much the same as they were 30 
years ago. 

Racial segregation in housing in Illinois is not just a 
Chicago problem either. Springfield, East St. Louis, 
Champaign-Urbana, are all characterized by segregat- 
ed living patterns. 

Further, these patterns did not come about by 
accident. Segregated neighborhoods were an accepted 
public policy during the first half of this century. 
Segregated housing came about not only through the 
actions of the real estate industry, but also has been 
caused by various programs administered by the U.S. 
Department of Housing and Urban Development. 

In addition, it must be admitted that this country 
has never agreed whether residential segregation per se 
is bad. Should whites be allowed to live in all-white 
neighborhoods or blacks to live in all-black neighbor- 
hoods? Should government be concerned only with 
discrimination or with segregation as well? 

Illinois has taken a strong stand against housing 
discrimination. In this regard the Illinois Human 
Rights Act is model legislation. Efforts by DCCA and 
IHDA have also been designed to promote housing 
integration. IHDA's aggressive, affirmative marketing 
policy is an example. While the dual housing market 
continues to exist, these efforts have had a positive 
impact as the previous discussion demonstrates. 

However, if integrated housing is to become a 
reality, more than laws and public programs are 
necessary. This is especially true as states anxiously 
await the impact of federal budget cuts and the "new 
federalism." If integrated housing is to succeed, it will 
require a public-private sector cooperation between all 
sectors of the housing and finance industries, federal, 
state and local governments, and our communities as 
well. 



Illinois Human Rights Act. Sec. 3-102. 



Ill 



Federal Enforcers 



On Increasing Housing Opportunities for 
Minorities and Women: A Muiti- 
Dimensional View of Current Practices 
and Ideals 

Chicago Area Office, U.S. Department of Housing 
and Urban Development (HUD)* 

Summary 

I suggest that some of HUD's most cherished 
housing practices need to be examined to determine 
their affect on minorities and the minority communi- 
ty. One of such cherished practices contained in HUD 
Handbook, 7417.1 REV-1, prohibits the development 
of housing in areas having a "high level of minority 
concentration." The consequence of complying with 
such a regulation is that very little, if any, housing gets 
built in the minority community. The result of such an 
urban policy is evidenced. 

Twenty-four thousand eight hundred and eighty- 
nine (24,889) Chicago inner-city residents are on the 
Section 8 Housing waiting list. They live in inner-city 
areas with high minority concentrations where hous- 
ing cannot be built pursuant to existing practices. I 
should, then, ask this question, should not "housing 
choices" for minorities include the choice to live in 
standard assisted housing in their own community? I 
most certainly think so. Therefore, I suggest that 
subject aforementioned policies (covering minority 



concentration) be modified so that the "greater 
housing choices" for minority people can include the 
choice to live in assisted housing built in areas where 
they currently reside. 

The Gautreaux Program currently operative in 
Chicago, also needs to be evaluated to determine 
whether or not its objective is compatible with the 
housing preferences of low income inner-city minority 
residents. Further, if the Gautreaux Program is to 
exist, it must be placed under the auspices of the 
Office of the Assistant Secretary for FH&EO and 
handed down through the Region to the Area Office's 
FH&EO Division where it rightfully belongs. There is 
no good reason why this equal housing opportunity 
program is lodged in the Office of the General 
Counsel. Minorities do not have enough influence in 
that Office to ensure consideration of the minority's 
point of views. Thus, the restricting and limiting 
provisions regarding the construction of new housing 
units in the minority community should be modified 
so that the minority community can maximize its 
redevelopment potential. 

But in order that greater housing choices be made 
available for minority people, a much more equitable 
share of HUD funds than are used for business 
purposes must be planned for and allocated to 
minority business enterprises. A much more equitable 
share of HUD funds deposited in banks and Saving 



• This paper was prepared by Samuel E. Riley, Fair Housing and 
Equal Opportunity, with the assistance of Michael J. Barnas, 
Assisted Housing Management OfTicer, Kathleen Finerty. Commu- 
nity Development Representative, and Christopher Murphy. Single 
Family Housing Evaluation. The paper was presented at the 



consultation by Elmer Binford. Area Director, with the assistance of 
Louciene Watson, Fair Housing and Equal Opportunity, and 
Samuel E. Riley. These are the views of the presenters and not 
necessarily the views of HUD. 



112 



and Loan Associations must be deposited in those 
which are principally owned or controlled by minority 
group members. 

A good rule to follow in working toward an 
equitable share of business resources for minorities is: 
the minority business participation level should ap- 
proximate the minority percentile in the political 
jurisdiction of the applicant agency. This means that if 
city X has 10 percent minority population and spends 
$1 million of its funds on business activities, it should 
target $100,000 to activities benefiting the minority 
business community. Such an approach would be 
conducive to restoring some of the vitality that the 
minority business community once enjoyed. In order 
to achieve these equal business opportunity goals, I 
suggest that the above state minority business enter- 
prise policy be implemented so that the minority 
business community can become viable once again. 

This same "good rule" can be used to determine the 
"fair share" amount of business resources that should 
be planned for and allocated to the various minority 
group categories comprising the minority population. 
This means that if a ten percent (10%) minority 
population consisted of 2 percent Asian, 6 percent 
Black, and 4 percent Hispanic population distribu- 



tions, their "fair share" of the total amount of funds 
allocated to the minority business community would 
approximate their respective population percentiles. 
Again, the principle should be used as a means of 
allocating funds for business purposes to the various 
minority people comprising the minority population. 

Further, I suggest that the Fair Housing and Equal 
Opportunity Operating Plan be developed at the Area 
Office level by the Fair Housing and Equal Opportuni- 
ty Director. This change is necessary in order to insure 
that the Operating Plan activities be consonant with 
the Area Office Manager's overall Equal Opportunity 
strategy. It would not be necessary, then, to execute 
two plans concurrently in order that Area Office's 
objectives be met. 

Moreover, I suggest that all Operating Plan activi- 
ties be carried out in a manner that optimizes their 
impact potentials. An example of such a design is 
attached entitled "FH&EO, Fiscal Year 1982 Operat- 
ing Plan." 

Finally, I asked three of my colleagues to comment 
on the prospects of obtaining equal housing opportuni- 
ties for minorities and women during the 1980's. Their 
commentaries follow as Exhibit Numbers 2, 3, and 4. 



113 



Exhibit 1 



FH&EO Fiscal Year 1982 Operating Plan 



The Community Planning and Development Pro- 
gram recipients are classified on the basis of their 
impact potential. Thus, recipients having the largest 
minority percentile or the largest amount of program 
funds are classified as to their potential for increasing 
housing choices, providing employment and business 
opportunities for minorities and women. Some agen- 
cies, however, are classified on the basis of their 
proximity to a large urban center rather than their 
population statistics. Thus, optimal agencies are those 
having the greatest impact potential for increasing 
housing choices and providing employment and busi- 
ness opportunities for minorities and women. Median 
agencies have the next highest potential, and so on. 



Also, eighty-three percent (83%) of the State 
Community Planning and Development funds is 
allocated to the three classifications of agencies. 
Likewise, 75-80 percent of the assisted housing units 
are allocated to allocation areas containing the opti- 
mal, median and marginal agencies. Therefore, the 
Area Office's Fair Housing and Equal Opportunity 
staff resources will accommodate the impact potential 
that exist within these agencies" jurisdiction. 

Staff focus will be on increasing housing choices for 
minorities and women and increasing employment and 
business opportunities concomitantly as well. 



114 



Exhibit 2 



Equal Housing Opportunity in the '80s: Obstacles and Objectives 



1. Obstacles to Wider Housing Opportunities for 
Minorities 

The single most formidable obstacle for minorities 
to securing decent, safe, and sanitary housing is likely 
to be restricted ability to pay. Where low income 
persons are concentrated, few incentives exist for the 
construction of new housing without some govern- 
ment intervention. Where minority group membership 
and low economic status tend to be associated and 
when access to housing is restricted by racial or ethnic 
prejudice, minority housing will tend to be of poor 
quality and even poorer value. HUD's response to the 
problem of restricted choices in housing has included 
increasing the supply of decent units and subsidizing 
tenants by paying the differences between a fixed 
proportion of their income and their actual cost for 
shelter. 

2. HUD Housing Development Efforts 

The traditional Public Housing program, operating 
through local authorities, usually on a county or city 
level, has been in operation since the late '30s. During 
the '70s, HUD began to provide Housing Assistance 
through the Section 8 program in projects of newly 
constructed, substantially rehabilitated, and moderate- 
ly rehabilitated units, with both profit-motivated and 
non-profit sponsorship. 

Federal mortgage insurance for the development of 
non-profit cooperative ownership housing projects has 
been available since the '50s. With the coupling, in 
certain instances, of the Section 8 program to the 
ownership cooperative program, it has been possible to 
diversify the population of the cooperatives and to 
extend the opportunity for ownership to many individ- 
uals who would otherwise have found home owner- 
ship nearly impossible. 

The Section 8 Existing Housing Program, adminis- 
tered by local Housing Authorities, provides housing 
assistance to renters within and through the private 



housing market. Participants receive certificates which 
state the unit size for which HUD, through the local 
Authority, will provide Housing Assistance, if the unit 
and lease are acceptable. Participants may lease "in 
place" from their current landlords or may move to 
any acceptable unit within the Housing Authority's 
jurisdiction. In the Chicago area, eight Housing 
Authorities have agreed to a Certificate Exchange 
program which greatly extends the potential mobility 
of certificate holders by allowing certain participants 
to choose a unit anywhere within the eight jurisdic- 
tions. Although the Section 8 Existing Program does 
not directly result in the creating of additional housing 
units, it does deliver housing assistance at a lower per 
unit cost and makes possible much wider dispersal of 
low income tenants than other forms of assistance. 

A similar result has been obtained recently in the 
traditional Public Housing program through the 
small-scale development of public housing units on 
scattered sites. Although the development cost has 
been higher on a per unit basis, the dwellings 
produced, while of modest design, are not visually 
distinct from surrounding neighborhoods, and the 
dispersal of the largest assisted families has been 
facilitated. 

HUD has had considerable success in encouraging 
the inclusion of a minority of subsidized units in 
projects which would otherwise have been built 
entirely for market rate tenants. The strongest induce- 
ment has been advantageous long-term financing 
under the Government National Mortgage Associa- 
tion's Program 25. 

There has been somewhat less success in the 
placement of predominantly or completely subsidized 
housing into neighbhorhoods which are nonminority 
or which, while containing a substantial minority 
population, are undergoing revitalization. A variety of 
legal and political challenges have been made to 



115 



assisted projects in nonminority areas. While the 
courts have sometimes sustained challenges on techni- 
cal and procedural grounds, they have not accepted 
any of the theoretical arguments aimed at the concept 
of assisted housing itself On some occasions, consider- 
able pressure has been exerted on local planning 
commissions and zoning boards to prevent favorable 
consideration of proposed assisted housing. In some 
instances, property owners have been induced by the 
weight of local opinion to withdraw from transactions 
or to refrain from offering their property for sale. This 
sort of opposition has increased the rate of attrition for 
projects in higher income neighborhoods and restricts 
the number of proposals which are made in such 
neighborhoods. 

Legislation already enacted will restrict eligibility 
and benefit levels for housing assistance as for many 
other transfer payments. These reductions will have 
effects which go far beyond immediate recipients. In 
neighborhoods with high concentrations of lower 
income individuals, the result will be to decrease the 
level of economic activity, boosting the rate of business 
failure and increasing substantially the rates of unem- 
ployment and underemployment. These effects will 
operate on top of the pattern of general economic 
slowdown caused by a restrictive monetary policy. In 
such circumstances, housing assistance payments are 
of critical importance not only to individual families 
but to entire communities. 

3. Objective 1: Creation of Accessible Jobs 

In order to expand housing opportunities for 
minorities, HUD must make a major effort to assure 
that newly created and relocated jobs will be accessible 
to minority group members. Distance imposes high 
costs in time and money for commuting and will 
decrease the likelihood of application being made for a 
given job. Given the strength of ties to existing 
minority communities and the persistance of patterns 
of residential segreegation, the availability of jobs to 
minority group members will depend to a large extent 
on the economic vitality of our older central cities. 

The increasing relocation of factories and regional 
and national administrative centers to suburban loca- 
tions has resulted in a massive displacement of jobs in 
manufacturing and in clerical and other services from 
the cities to the suburbs. HUD's development policies 
must ensure that central cities are enabled to compete 
on an equal basis for jobs and tax revenues to avoid 
reinforcing the disadvantages of those central city 



residents who are lower income and members of 
minority groups. 

4. Objective 2: Deconcentration of Assisted Housing 

A sound objective for the '80s must be the eventual 
decommission of the massive public housing projects 
built during the '50s. These projects typically consist 
of large numbers of buildings with 9-19 stories, with 
double-loaded corridors, open galleries, no lobbies or 
other access controls, and only one of two elevators. 
The scale of these projects and their concentration in a 
few minority neighborhoods was a way of avoiding 
controversy about the location of public housing at the 
time. The design philosophy in use is seriously out of 
touch with human needs (particularly for nonelderly 
families), and the projects demonstrate throughout a 
dangerously false sense of economy. 

The housing which resulted is expensive to maintain 
and requires considerable retrofitting to be acceptable 
as decent, safe, and sanitary. While the units in these 
projects are an improvement in themselves over the 
deteriorated units which they replaced, the social 
atmosphere which the project design fosters is charac- 
terized by isolation and fear. 

These massive and poorly designed projects are a 
mixed blessing to the residents, but an unequivocal 
embarrassment to the effort to provide decent housing. 
As the most visible example of public housing, the 
projects constantly present to the entire nation nega- 
tive and misleading images of housing authority 
management, of housing authority tenants, and of all 
forms of subsidized housing. Conditions in the 
projects are not uniformly grim, but the image of 
publicly provided housing will continue to be strongly 
colored by the grimmer aspects of life in the large 
projects as long as they are in use. 

In a few cases, efforts are already in progress to 
decommission the least workable projects, at least in 
those cities where the intensity of demand for public 
housing has decreased. Until replacement housing is 
available, however, it is unrealistic to expect that the 
use of even the least successful projects can be 
foregone. The cost of replacement will not be slight. 
Currently it would require approximately $16 million 
to replace just one of Chicago's largest high rises (with 
no net increases in the housing supply). By the end of 
the decade, costs may be more than double what they 
are today, although the costs of maintaining such 
projects may be even less acceptable. 



116 



Exhibit 3 



Comments on The Usefulness of HAP's in Effecting of 
Production of Assisted Housing 



Up to the present, any community requesting 
Community Development Block Grant Funds, wheth- 
er under the Entitlement or Small Cities Program, has 
been required to submit an application which included 
a Housing Assistance Plan (HAP). 

The purpose of the HAP is twofold. First, it 
requires communities receiving Block Grants to assess 
the housing needs of their low-and moderate-income 
persons and minorities, and to address a portion of 
those needs within a 3-year period. Secondly, it is 
intended to provide an input mechanism for the 
community to inform HUD of the type and propor- 
tion of assisted housing needed. Ideally, therefore, 
HAP's could have a shaping influence on the yearly 
Housing Allocation plan developed by the Area 
OFfice to distribute available assisted housing 
throughout the state. 

It is true that the dollar amount of contract 
authority available to each area of the state is based 
not on HAP goals, but on need, according to the Fair 
Share formula which is based on the census. But the 
spread of units offered to each allocation area by 
housing type and household type, under this contract 
authority, could be based on that area's HAP and its 
proportions. 

In actual fact, however, the goals established by 
communities having HAP's far exceeds the contract 
authority available for all forms of assisted housing 
throughout the state. And the competition is not 
limited to communities with HAP's. 

The limited housing resources cannot always be 
offered to cities (except for very large ones like 
Chicago) or even countries on an individual basis. 
Once the contract authority is divided into metropoli- 
tan and on-metropolitan funds, a dollar amount is 
computed by housing program type for each county. 
The figures arrived at in this manner are frequently 



too small to support economically feasible housing 
project. Therefore, regional allocation areas must be 
established by combining several counties and encom- 
passing sufficient contract authority to support such 
projects. Only then can the local requirements by 
housing type and household type, as expressed in the 
HAP, be looked at. Since there may be several HAP's 
operative in a given regional allocation area, their 
individual influence on the units offered in that area 
may be quite indirect. 

A community's performance in meeting its HAP 
goals is regularly analyzed an evaluated, through 
monitoring, grantee performance reports, annual in- 
house review, housing production recordsw, and so 
on. HAP implementation is one of the four major 
areas of consideration when a community is moni- 
tored. Attention is focussed on performance against 
the three year goals, since the purpose of annual goals 
is to insure that needs will be addressed in a timely 
manner within the three-year cycle. 

Currently, the third year increment of the three- 
year HAP cycle for entitlement cities is in effect. As 
stated above, the goals for assisted housing far exceed 
the contract authority available over the three-year 
period, and most of the three-year goals (particularly 
in the area of assisted renter units) have not been met. 

A city not achieving its HAP goals is nonetheless 
expected to demonstrate what positive efforts it has 
made. Applicants are required by the program regula- 
tions to take all actions within their control to 
facilitate implementation of the plan, and particularly 
to address the needs of families and large families 
requiring rental assistance. Failure to achieve goals 
may result in a monitoring finding, and could lead to a 
grant condition or grant reduction in the case of 
entitlement communities. 



117 



An example of conditioning a grantee with favor- 
able results is the case of Kankakee, Illinois. The city 
council had passed a resolution by which the entire 
city was rezoned, limiting any new construction to 
single family dwellings. Under the circumstances, the 
three-year HAP goal for new construction of renter 
units could not be implemented. Virtually all devel- 
opers" proposals for Section 8 new construction would 
be excluded. 

The city was advised that this action was viewed by 
HUD as obstructive to HAP implementation. The city 
stated that each proposal for assisted multifamily 
housing could be considered individually by their Plan 
Commission. However, this was unacceptable and 
conditions were placed on the city's grant approval, 
stating that the restrictive zoning must be eliminated, 
and available sites for future multi-family assisted 
housing must be identified, or the grant would be 
reduced. After meetings between HUD staff and the 
city government, the city eventually complied and the 
conditions were lifted. HUD's Housing Division later 
targeted a NOFA for 95 units of Section 8 new 
construction assistance to that area, and five proposals 
were received for development the City of Kankakee. 
They are currently undergoing processing by the 
Housing staff. 

An example of a grantee being reduced for poor 
HAP performance (and other reasons) is the case of 
DuPage County. This urban county entitlement grant- 
ee repeatedly failed to achieve HAP goals, particularly 
for new construction of family rental housing, while 
elderly rental housing goals were being exceeded. 
CDBG funds were budgeted for housing rehabilita- 



tion, which was never carried out. Funds were also 
budgeted for housing rehabilitation, which was never 
carried out. Funds were also budgeted for acquisition 
of sites for construction of assisted housing, only to 
have the activity dropped. The county government 
objected to developers' proposals in respionse to 
Section 8 NOFAs. After giving warnings since 1976, 
the Chicago Area Office reduced the 1979 grant to 
zero. The county took no action to qualify for grants 
in 1980 or 1981. While no positive housing efforts 
have yet resulted from these sanctions, the county is 
now indicating a tentative interest in qualifying for 
FY'82 funds, in which case a resolution of the housing 
issue will figure prominently. 

Under the 1981 amendments to the Housing and 
Community Development Act of 1974, the HAP 
continues to be required for entitlement grantees. 
Cities receiving grants under the Small Cities Pro- 
gram, respKDnsibility for which has been transferred to 
the State of Illinois, will no longer be required to 
submit HAP's. In the past, a city's previous HAP 
performance was a pivotal issue in the awarding of 
bonus points and determination of capacity undertak- 
en during the yearly ranking of Small Cities pre- 
applications. 

Entitlement cities, therefore, will continue to be 
required to analyze and acknowledge their need for 
assisted housing, and in some cases the HAP will 
remain a useful enforcement tool for HUD. But unless 
the unlikely occurs, and there is a vast increase in the 
funds available for assisted housing, the goals estab- 
lished by cities through their HAP's will continue to 
be missed by a wide margin. 



118 



Exhibit 4 



Rehabilitating the Inner-City Housing Stock 



The single family housing market in the Chicago 
metropolitan area is facing a critical situation. With 
rising costs and high interest rates the average 
homebuyer can no longer afford the average priced 
home. Based upon data figures provided by the 
Federal Home Loan Bank Board, HUD has estimated 
that as of October, 1981 the median price of a single 
family residence in the Chicago area is $71,603. An 
income of $45,700 would be required for a prospective 
buyer to qualify for FHA financing on such a home. 
However, the most recent Census Bureau data indi- 
cate that the 1981 median family income for owner 
occupied units in the same area is only $29,600. 
Clearly housing is moving farther out of reach for 
larger segments of the homebuying public who are 
now experiencing the problems once unique to minori- 
ties and those at the lower end of the income scale. 

In the seventies minorities experienced mixed re- 
sults in their efforts to achieve economic and social 
equality. This is partly because goals in the areas of 
income and housing were not always consistent. Laws 
such as the Davis-Bacon Act which helped establish 
equity in wages through payment of the prevailing 
wage in an area also tended to inflate the cost of 
housing in that area. Consequently any gains were 
offset by a higher cost of living. 

In the realm of income different minorites experi- 
enced different trends. In 1970 the median incomes of 
black and Hispanic homeowners were respectively 7 
percent and 1 1 percent less than the overall median 
income in Chicago. By 1975 these median incomes 
were respectively 14 percent and 4 percent less than 
the overall median income. Hispanics made gains 
while blacks lost ground. 

Homeownership increased among minorities in the 
City of Chicago. Minority homeownership jumped 
from 22 percent to 31 percent between 1970 and 1975. 
However, there was a darker side to the story told by 



the homeownership statistics. During the same period 
non-minority homeownership declined 10 percent 
within the city casting the lingering shadow of urban 
flight over the Chicago housing market. 

At first glance it would appear that the higher costs 
of new construction and housing in general outside the 
central city have tended to limit minority options in 
the housing market. However, examination of the 
goals which minority groups set for themselves makes 
it clear that problems in the central city were much 
more instrumental in limiting minority achievement. 
According to 1975 Census Bureau data the majority of 
minority urban dwellers in Chicago do not want to 
move although they feel their neighborhood condi- 
tions are undesirable. 80 percent of the black home- 
owners, 76 percent of the black renters, 69 percent of 
the Hispanic homeowners, and 73 percent of the 
Hispanic renters in Chicago agree that their neighbor- 
hood conditions are undesirable. Yet, 79 percent of the 
black homeowners, 70 percent of the black renters, 83 
percent of the Hispanic homeowners and 83 percent of 
the Hispanic renters do not want to move. The three 
main undesirable conditions, which were also the 
three main reasons for moving cited by those members 
of these minorities who would like to move, were 
crime, litter, and the number of abandoned or deterio- 
rating buildings. The unmistakable conclusion is that 
the thrust of any single family housing program to 
benefit minorities must be aimed where it will benefit 
those minorities the most: the inner city. 

Existing implementations of affirmative action in 
single family housing programs are aimed primarily at 
new construction in largely suburban areas. Programs 
geared to help low and moderate income families, like 
Section 235, generally do tend to help minorities since, 
as noted earlier, minority median income is below the 
overall median income. However, the Section 235 
program, which has been suspended for a review of 



119 



funding, also has had its greatest impact on new A program for rehabing single family housing in the 

construction in suburban areas. The area which has inner city would not only provide housing in areas 

been larely neglected in single family programs is where minority groups wish to live but would also 

rehabilitation of existing housing in the central city. alleviate the undesirable influence of urban blight. 



120 



Q & A' 



At virtually any conference some of the most 
provocative and informative statements are offered 
after the formal presentations are delivered. This 
consultation proved to be no exception. What follows 
are just some of the observations made by invited 
participants and members of the audience, frequently 
in response to other presentors or questions of the 
Illinois Advisory Committee, which were not included 
in the published papers. 

On the reality of housing discrimination: 

The major points I would emphasize are these. The 
discriminatory dual housing market which separates 
black from white citizens in so many of our neighbor- 
hoods and communities in the Chicago metropolitan 
area is not a natural growth. It is a deliberate creation 
at a particular point in history in which the organized 
real estate industry was the major actor. It is sustained 
in part by the inertia of about six decades now of 
activity in which discrimination and segregation were 
built into almost every phase of the marketing system. 
And it is sustained in part by the continuing deliberate 
acts of the major actors in the housing field. Those 
include the real estate industry which still persists in 
outright discrimination in large sections of the metro- 
politan area in a practice known as racial steering, the 
steering of blacks to black or integrated areas and 
whites away from those areas to white areas in other 
parts of the area. It is also an industry which remains 
rigidly segregated, in which blacks serve the black 
areas of the metropolitan area and whites serve the 
others and there is almost no integration of work 
forces in the real estate industry. 



The other actors are governments at the federal, 
state and local level. . .any government program 
which does not deliberately set out to overcome the 
dual housing market will end up reinforcing it. 

Kale Williams, Executive Director 
Leadership Council for Metropolitan Open 

Housing 

I think the key to overcoming the dual housing 
market or making progress to overcome the dual 
housing market is the general expansion of hous- 
ing. . .It is very important that we understand that 
federal subsidies alone cannot carry the burden of 
expanding housing choices. And it's not just because 
in my judgment of the limitations on budget, it also 
has to do with the monetary system and the cost of 
capital. The interest rates now are so high that even 
with federal subsidies and even with federal guarantees 
many of the proposals we now have are not feasible. 
Elmer Binford, Area Director 
U.S. Dept. of Housing and Urban Development 

There is not the money available to the state of 
Illinois, to the federal government, to any local 
community, to end the dual housing mar- 
ket. . . .Ultimately only a partnership, not only of 
government, state, local and federal, but a partnership 
including organizations representing communities and 
the business community, will bring about the end to 
the dual housing market. 
Michael Spivey, Assistant to Governor Thompson 

. . .but racial integration needn't really cost a lot of 
dollars. It requires a commitment, a vision, and it 
requires policies that promote it in order to eradicate 
the segregative influences, and create the proper 



121 



climate. But it doesn't cost a lot. But it's got to be 
valued first. And I don't sense that there has been 
national leadership that has valued it and that's what's 
most needed. 

Donald L. DeMarco, Assistant Village Manager 

Park Forest 
What I'm saying here is, if you're asking me is there 
much concern for low and moderate income people of 
any color, I think the answer is no. It's a very frank 
no. . . . There are individuals in the city government 
that care, there are elected officials that care, but in 
terms of policy, there has not been any kind of 
effective lobby for those kinds of people. 

David Orr, Alderman 
49th Ward, Chicago 
. . . discrimination against blacks is more sophisti- 
cated now, and very often, blacks looking out in the 
suburbs doesn't know they've been discriminated 
against, because they may be treated really kindly by 
the realtor they go to and they don't know until a long 
time later that they've experienced any sort of differ- 
ential treatment. 

Roberta Raymond, Director 

Oak Park Housing Center 

. . .there is a general retreat in our society from a 

commitment to equality of opportunity across the 

board,. . . it is not at the top or near the top of the 

concerns of as many people as it was in the past. 

Kale Williams 
There are reasons why those people on the westside 
and the southside cannot get those apartments on the 
northside lakefront; and they often have to do with 
race and they often have to do with the existence of 
children in the family which is another serious 
problem. I think probably the most serious or the most 
pervasive problem that I experienced as a Legal 
Services lawyer,. . .where families try to move out of 
substandard housing, their search inevitably leads to 
one closed door after another on the basis that there 
are children in the family. 

Ron Stevens, Supervisor 

Housing Division 

Cook County States Attorney's Office 

. . .everyone expects racially diverse communities 

to fail. 

Roberta Raymond 

On the condition of public housing: 

The Chicago Housing Authority's 40,000 regular 
units are in total disrepair and if they were brought up 
to the present building code in the city of Chicago, it 



would take approximately one hundred million dollars 
to do so. That means to correct the deficiencies in the 
present housing stock of the Chicago Housing Author- 
ity, it would take approximately one hundred million 
dollars. . .statistically we house 140,000 people. 
That's what we've got on paper. But in reality it's 
about 300,000 because we have two and three families 
staying in one unit because they have nowhere to 
go. . . . 

But, the enforcement mechanisms that are not 
working now must be forced to work. If the Building 
Department of the city of Chicago and HUD inspect- 
ed the 40,000 units of public housing I dare say that 
they would all be closed down tomorrow for being so 
far out in the cold that they would be considered 
uninhabitable. 

Renault Robinson, Commissioner 
Chicago Housing Authority 

You know, if they wanted to stop dope in our 
community they could do it. When. . .white kids 
were tripping out on LSD and jumping out of 
windows, talking about they could fly, hanging out in 
the suburbs and stuff, hey, they almost ran LSD out of 
the business. They could do the same thing in the 
black communities with the T's and blue's. The 
doctors control the T's and blue's. The pharmaceutical 
companies control the T's and blue's. Black people 
don't control no dope. And if they spent as much time 
in trying to deal with the folks that control the dope as 
opposed to those folks who become victims of the 
dope, then the dope would not exist in our communi- 
ties. The same thing with the gang question. The gangs 
have always worked in the best interest of the 
politicians and the developers. 

Marion Stamps, Director 

Tranquility Memorial Community Organization 

Former resident, Cabrini-Green 

. . .the row houses and walk-ups are far, far 
better — as living experiences — than the high 
rises. . . . 

. . .in terms of the existing public housing, I think 
the only thing that will really make a difference is 
from the top down CHA make a commitment to hire 
and promote on the basis of experience and profession- 
alism, clean out the incompetent and the corrupt 
employees who exist there, and develop serious profes- 
sional management. 

Ron Stevens 

Let me just say we've got 25,000 people right now 
on our waiting list for public housing. . . .On our 
waiting list for Section 8 certificates, we don't count 



122 



them in people any more, we count them in years. We 
have a seven to ten year waiting hst for people to 
obtain a Section 8 certificate. 

Renault Robinson 

On the merits of integration: 

I think it's far more important to develop and build 
a healthy climate in which you can live because in the 
final analysis, if you make housing available to 
somebody in an all white community you have in fact 
affected those three or four families that may move 
there; but that does not do anything — does not make 
an appreciable impact on all of the hundreds of 
thousands of people that still live in the inner city. 
Michael W. Scott, Vice Pres. 
Pyramidwest Development Corp. 

One of the consequences that we are most con- 
cerned with of the displacement issue is the fact that 
when people are displaced they get scattered through- 
out the city. It's not an organized displacement where 
they all go from one neighborhood to another neigh- 
borhood. And consequently when people move from 
neighborhood to neighborhood, their children have to 
be transferred from school to school and the chances 
of political representation are limited, because if the 
whole neighborhood is dispersed there's little possibili- 
ty of electing Latino officials to represent us. . . . 

I think that as long as we continue to be dispersed 
our chances of having equal political representation 
are going to be very limited, and as long as we do not 
have representation our chances of improving our 
situation in terms of jobs and in terms of housing, et 
cetera are going to be limited. 

Mario Lopez, Exec. Director 
Community Housing Education Corporation 

The fundamental philosophy was that blacks would 
live better lives reducing the chances of riots if they 
moved to non-ghetto areas. 

This policy has been the base for denying necessary 
funding and resources to black communities. 

Jean Oden 
Unite 

. . .1 find it pure folly to spend a hundred million 
dollars even in the name of integration to build two 
thousand new units, half of which would be senior 
citizen residences when we have forty thousand units 
which are presently not providing people with safe, 
decent, clean living conditions. 

We have not yet developed the appropriate manage- 
ment capacity to properly handle what we have and to 
add two thousand new units at the exorbitant costs of 



one hundred million dollars does not, again, appear to 
me to be a sound decision. . . .1 think the idea of 
integration in housing although a good one, should 
give way to quality housing wherever it might be. . . . 

Renault Robinson 

It seems to me that our best chance of providing 
quality housing for everybody is to get rid of the dual 
housing market. So much of what is now wrong with 
housing results from the patterns of discrimination in 
the past. Two examples. One is the one I gave earlier. 
The reason we have these massive concentrations of 
public housing which are difficult to manage and 
maintain. . .is that we weren't able to build scattered 
site housing at an earlier point in small concentrations 
that would be appropriate for families. . . . 

The second is that the main engine for the deteriora- 
tion of neighborhood after neighborhood in Chicago 
has been the process of rapid racial transition, 
hundreds of thousands of people leaving an area and 
being replaced by people of a different race and with 
somewhat different cultures in a very short period of 
time. And in that situation the institutions which 
provide the essential network of community life, the 
churches and the schools and the small businesses just 
can't survive. And, when you add to that the 
withdrawal of funds to keep up the property by banks 
and savings and loans, you have what we have seen in 
neighborhhod after neighborhhod. That racial transi- 
tion is followed by deterioration. 

Kale Williams 

I don't think that you can make much of a case for 
the need for. . .more opportunities to choose segrega- 
tion, whether that's white segregation, black segrega- 
tion, Hispanic segregation or what have you. These 
kinds of choices abound; stable racially diverse hous- 
ing markets are few, very few. And where they exist, 
they're threatened. It requires a lot of ingenuity, a lot 
of effort and not inconsiderable sums of money in 
order to try to create the integrated option and to 
maintain it. . . . 

My own view on that subject is that whatever the 
consequences, people have to have the right to choose 
where they want to live. And, further than that, it is 
my view that the black political agenda can be 
advanced more effectively if it has a strong base in the 
suburbs than if it is a monolithic black community 
within the central city of the metropolitan area. 

Kale Williams 

. . .we do indeed in this country need models or 
examples of communities that achieve long-term racial 
diversity. And that there are some things that the 



123 



federal government can do to support these communi- 
ties and hopefully encourage more communities in the 
United States to become racially diversed. But that 
without successful models or examples, I'm afraid the 
future will be rather bleak. 

Roberta Raymond 

On economics and housing: 

The problem with charging what the market will 
bear in a housing economy like the one in which we 
now live is that there is a kind of artificial inflation 
that has taken place. I'm not speaking about the 
landlord who passes on the energy costs that are 
necessary, who passes on the maintenance cost, et 
cetera. I'm talking about landlords who find out that it 
is possible to raise their rents by $100 a month because 
the market is so severely stressed that they can do it, 
because people are desperate enough for those units 
that they will pay excessive rents. And so the landlord 
then charges that $100 more a month or whatever. 
There is nothing illegal about that, it's to be expected 
in a society in which we view housing as primarily an 
investment opportunity. But nevertheless, the role of 
those landlords, as benign as it may be individually is 
to again exacerbate an already serious problem of 
unavailability of affordable housing which is decent. 

Ron Stevens 

I'm saying that if the federal government is pulling 
out, that is the single biggest disaster that I see in the 
whole Reagan program. No public housing, no hous- 
ing that is going to solve the needs of low and 
moderate income people can be done without a 
subsidy. It's impossible to be done without a subsi- 
dy. .. . 

I can't believe that the private sector is going to 
have a significant role in dealing with volunteerism in 
dealing with housing conditions in their own commu- 
nity, if right now the private sector is in its own 
financial trouble. . . . 

But for a government to say that the private sector 
is going to be the solution, my answer is, not only is it 
wrong but what makes anybody think that the private 
sector is so all knowing and bright that they can 
understand something that is not something that 
would normally involve them, such as housing pro- 
duction, housing rehabilitation. 

Fidel Lopez 
Area Development Continental Bank 

You see, we've first got to understand why public 
housing in Chicago was built in the first place. Public 
housing in Chicago was not built to provide low- 



income housing for poor people because of World War 
II. It was built to maintain tlie land. . . . 

So, what I'm saying is that in '81 the game plan is 
different. The game is to run the people off the land 
and that's why Jane Byrne moved in there, to justify 
forcing hundreds of people out of their houses in 
Cabrini-Green, in order for Rubloff and her favorite 
buddy, Chaddick, to take that land. 

. . .as time goes on it will become very, very clear 
that the move in Cabrini-Green by the Mayor had 
nothing to do with saving our babies but making sure 
that the sweetheart deals and relationships she had 
made with her big developers could become a reality. 

Marion Stamps 

. . .1 think the key to overcoming the dual housing 
market or making progress to overcome the dual 
housing market is the general expansion of hous- 
ing. . . .It is very important that we understand that 
federal subsidies alone cannot carry the burden of 
expanding housing choices. And it's not just because, 
in my judgment, of the limitations on budget, it also 
has to do with the monetary system and the cost of 
capital. The interest rates now are so high that even 
with federal subsidies and even with federal guarantees 
many of the proposals we now have are not feasi- 
ble. . . . 

I think it's very important that public policy foster 
the flow of capital into the housing industry. I think | 
it's very important that we have tax equity, local tax 1 
equity so that real estate development carries it's fair 
share but not more than its fair share in terms of the 
cost of government. I think it is important that when 
we examine a subsidy program that we ask ourselves 
how much of the subsidy is actually going to the target 
populations. 

Now as you know, one of the things that is now 
being discussed is the voucher system which is very 
similar to the Section 8 existing system. And the 
reason I think that appears to be such an attractive 
idea is because at the present time it is assumed, it is 
estimated that only about one half of the housing 
subsidies allocated for low income people actually gets 
to the people for actual shelter. You have the finance 
cost and the attorney fees and the architect costs and a 
lot of other things. . . . 

And we also have to ask the question about what 
should be the role of public housing subsidies in the 
future, given their cost: I think there are two tests. 
One is, are these subsidies stimulating the expansion of 
housing. And two, are most of the dollars allocated 
reaching the target population. 



124 



Elmer Binford 

. . .1 suggest that there are far more housing units 
than we need than we can ever effectively absorb. 

There has been over the last two decades new 
construction far in excess of any needs that have been 
generated. National housing policy has been to spur 
the economy and to promote certain parts of the 
financial industry, primarily savings and loan associa- 
tions, by means of promoting construction. Local 
suburban policy has been to encourage new housing in 
order to increase the tax base — the fiscal base — of the 
community. This has led to two or three times as 
many housing units having been built during the last 
two decades as there have been new household 
formations. In this country, those who can afford to 
move into these new units are encouraged to do so by 
a pervasive ethic that says you get ahead by moving 
up, that is out of the neighborhood where you are 
now. Not everyone moves of course, but enough 
people do to create vacancies elsewhere. 

People are encouraged to become consumers of new 
units in order to get them off the market, not because 
they need new housing. And there are a whole host of 
incentives and subsidies which do this, primarily in 
federal tax law and federal housing policies. As these 
people move into the newly constructed housing 
others move into the housing they vacate driven by the 
same forces and the same ethic that says you move up 
in life by moving into a new house. 

Usually after two or three moves you encounter a 
unit which is not then filled by someone else moving 
in, at least it's not filled at a price or at a rent that the 
owner expects or would like to obtain. This is where 
the slumlord comes in. He picks up the property, puts 
nothing into it, often does not pay property taxes on it, 
rents it to whomever he can find for whatever rent he 
can for as long as he can until it finally bums or winds 
up in Housing Court and is demolished. Now, that's 
the slum housing that we see and these are the garbage 
strewn vacant lots that we see. . . . 

But this slum housing and these vacant lots are tied 
directly and inevitably to the national, state and local 
policies that use various components of the housing 
industry, both on the construction and the finance 
side, for purposes other than providing housing for 
people who need housing. In other words the policies 
are geared to promote employment in the economy 
and if you read the newspapers, you will see every day, 
at least every other day, in the business section of the 
newspaper a story about the housing industry which 
talks about the need to spur the economy, the need to 



promote employment in that industry and related 
industries. And it is that use of the housing industry 
which causes the housing problems that we have 
because that use of the housing industry is not geared 
toward solving the housing needs of the people who 
cannot afford housing. 

What we need then in terms of subsidy programs 
are programs which are targeted specifically to the 
needs that we have. The programs that we have now 
are targeted fairly well toward achieving their purpose 
which is to get new construction but they are not 
targeted towards the rhetoric that's often used to sell 
those programs to the common person which is to 
provide for people's housing needs. And we need to 
connect the rhetoric towards good aims with the 
actual policies, maintaining good sound housing in 
central cities and putting subsidies into housing for 
poor people rather than into subsidies for devel- 
opers. . . . 

Then, there is the question of tax subsidies and 
paying companies to open in depressed areas. Here 
again we are on the leading edge of pursuing the same 
kind of policy with commercial and industrial devel- 
opment as we have had with respect to housing. There 
is a need for new commercial and industrial activity in 
certain neighborhoods. There is a need for jobs but if 
we simply offer incentives anywhere for people who 
say they are meeting this need we won't acually meet 
the need. We will wind up with developments which 
would have gone forward anyway. It is inconceivable 
that the north Loop would be undeveloped if only the 
city would pull back — that is one place where the 
private sector would move. They have throughout the 
rest of the Loop. 

In other cities as well you find similar patterns. 
. . .There is a case of a General Motors plan 
relocation in Michigan where the GM people applied 
for and obtained a tax abatement and afterwards 
said,". . .we would have been irresponsible to our 
shareholders not to have applied for the tax abatement 
to cut our costs as much as we could, but clearly we 
were not going to locate anywhere else if we didn't get 
the abatement." This is the pattern of these abate- 
ments. 

So the problem is that we have on the one hand 
genine needs and rhetoric which says that we are 
going to develop programs to meet those needs, but 
then on the other hand we have programs which are to 
unfocused, offer broad subsidies and therefore never 
get to meeting the actual needs. 



125 



Arthur Lyons 

School of Urban Planning and Policy 

U of I, Chicago Circle 

It would be my opinion that first of all as long as we 

have persons of low income, a very low income, as 

long as we have large segments of the non-working 

poor the need for shelter will prevail so first of all I 

think there will be a need 20 years from now for the 

shelter that's now being provided by places like Robert 

Taylor Homes and like Cabrini-Green. At the same 

time I say that I also think that. . . .we are working 

with the -local housing authority and the city of 

^Chicago to improve the management and maintenance 

of those units so that they can be sustained as a quality 

residence for those persons who live there. 

Elmer Binford 

On enforcement: 

And HUD, which has the purse strings, again, has 
abandoned its responsibilities by not strictly enforcing 
its own rules and regulations which dictate how public 
housing should be built and how it should be managed 
and what the end results of that product should be. 

Renault Robinson 

In addition, we found an enforcement mechanism 
that had completely broken down in cases where 
minorities, especially black people, were complainants. 

Jean Oden 

Other than the federal subsidized or insured 
projects, we do not have a system [for monitoring 
equality in housing]. Some people refer to us as 
enforcement, but we are not. It's a voluntary adminis- 
trative means of assuring that a private institution or 
housing project does not practice discrimination. . . . 

The only enforcement arm we have presently in 
Title VIII is the administrative ability to issue 
subpoenaes, that's the strongest part of Title VIII at 
this particular time. But once we have run the course 
with the respondents and complainants and they do 
not wish to participate any further, we must refer that 
matter to the Department of Housing and Urban 
Development in Washington who can refer it to 
Justice. 

Louciene Watson, Director 

Regional Office, HUD 

Fair Housing and Equal Opportunity 

(/« response to the question, "What is your action 
plan for housing enforcement?") 

At this point there is no plan. 
126 



Richard Johnson 

Dept. of Human Rights 

State of 111. 

And I think now it's more important than ever that 
we put heat on the enforcement agencies whether they 
be at the federal or local level to see that the standards 
for the quality of housing and the maintenance of that 
housing are kept up and enforced as well as we would 
do it in some of our "better" communities in the city 
of Chicago. 

Renault Robinson 

I think that we need to understand that housing is 
not like a car or clothing or something. It is an 
incredibly limited resource that we are losing and that 
unless we exercise serious regulation of it people suffer 
in a very profound way. 

Ron Stevens 

I think the most effective sanction of all is the 
licensing sanction and if that were applied it would 
have a remarkable remedial effect on the real estate 
industry. And, there's an interesting history on that in 
Chicago. In the mid '70's there was some new 
legislation passed in the state legislature, some new 
rules adopted by the Real Estate Examining Commit- 
tee of the state, and for a period of years there was 
some approach to effective enforcement of the licens- 
ing law. 

Over a period of about three years there were some 
40 licenses suspended. Since the change in administra- 
tion about five years ago, even though the same law is 
on the books and the same rules apply in the Real 
Estate Examining Committee, there has been very 
limited — to use a polite word — enforcement of those 
provisions. I think that would be my top priority. 

The second would be one that I've already men- 
tioned, the enforcement of the equal employment 
opportunity laws in respect to the real estate industry. 
I think it's nothing short of criminal that this largest 
trade association in the country in control of a 
resource which is really so fundamental, not only to 
the individual family, but to the way our communities 
develop, is the most segregated industry in the whole 
society and there hasn't been found a way to deal with 
that. 

Kale Williams 

One of the unfortunate aspects of code enforcement 
in our city is that there is far too much reliance on 
technical violations and not enough concentration on 
real dangers to people or the integrities of the 
buildings, and Pilsen is probably the best example in 
the city of that. 



And, probably for Pilsen the thing that is the 
biggest problem is the inability of people to maintain 
their own property legally. It is possible to maintain 
your own property in Pilsen relatively inexpensively 
but it is very difficult to do so legally. The reason for 
that is because, again of the particular kinds of 
technical code requirements which do not have a great 
deal of relevance to this particular kind of housing 
stock in this area. . . . 

Now, there are a lot of very skilled people in that 
community. Unfortunately the test is not whether the 
work that you did is good the test is who did it. . . . 

I have never in any of my experience seen the extent 
and consistency of either incompetence or question- 
able motives that I saw in my work representing 
tenants in public housing situations. . . . 

It is far too easy in this city and any other large 
metropolitan city to just accept this notion that well, 
things aren't suppose to work and so, if our public 
housing system doesn't work or the building code 
enforcement or whatever, well it's just not suppose to. 
Well, that's rubbish. Our city is not going to survive as 
long as we continue to belj^eve that kind of thing and 
we simply have to demand of our public institutions 
that they learn how to work. Along that line we also 
have to demand of ourselves that we not give up on 
these kinds of problems and that we get involved and 
slug it out for as long as it takes. 

Ron Stevens 

I can truthfully say that in terms of the Illinois 
situation which is what I'm in charge of, that I have 
been encouraged and I am continually encouraged to 
bring forward to my bosses problems where programs 
aren't working, problems of waste, fraud or abuse, 
problems of inequality, problems of nondiscrimination 
and my bosses have assured me — have reassured me — 
that one, I will be supported as I attempt to deal with 
these problems with the authority I have and two, if 
the problems are of a pervasive nature that they will 
give me all of the headquarter's assistance that they 
have to offer. 

Elmer Binford 

On organizing and public policy: 

The first thing I would tell that young mother is to 
get involved in that community, okay. That she must 
understand that this is her home; good, bad or 
indifferent. And that the only way the situation in that 
community is going to change is that she must get 
involved. She has got to understand that as a young 
mother she has the responsibility to provide some 



directions for her children. She cannot do that sitting 
at home watching as the world revolves around the 
secret storm at the edge of night 'cause love is a many 
splendored thing. 

Marion Stamps 

Well basically, we're going to have to get away from 
unions. We cannot, with the amount of money that is 
being allocated these days and with the fixed income 
that most of the people in public housing live on, we 
cannot, public housing throughout the country cannot 
afford union rates. So we would definitely have to 
come up with a program where say, residents would 
be trained to put in a window or to do some plumbing 
work. You know, putting in a toilet ain't that bad. 
Putting in a light fixture, you know, where we are 
being charged $17 and $18 an hour for these services 
now, that would be the only way that I could see it, is 
that the residents would have to start working. 

Jerome Hunt, Resident 
Dearborn Homes 

. . .we believe that Cabrini-Green ought to be 
decentralized. The question is who's going to do the 
decentralization. . . .We want the residents to be in 
total control of CHA from the administration all the 
way down to who is going to sweep the ramps. . .One 
of the reasons that CHA operates the way it operates 
is because nobody works in the administration at 
CHA ever lived in public housing. 

. . . .there are two high-rise buildings in Cabrini- 
Green that are 19 stories high. Those two buildings 
ought to be turned into a mall, just that simple. They 
can do it at Schaumburg and Evergreen Plaza and all 
those other places. I mean, look at Water Tower. 
Water Tower ain't nothing but a high-rise building 
with a mall in it. With a shopping district in it, okay. 
They can do the same thing with those two buildings. 
That would create an economic base in that communi- 
ty, that would give folks in that community jobs, that 
would develop a certain amount of independence and 
pride to the folks in that community. 

. . .give us our share of the money, and we can deal 
with Cabrini-Green ourselves, okay. 

Marion Stamps 

There are ways in which you could not stop 
conversions but, at the same time deal with the 
displacement problem. In Chicago, there hasn't even 
been serious discussion of any of this. So again, it's not 
a question of is there the technical ability to do it, it's 
simply a question of will, which is primarily a political 
question. . . . 



127 



First of all you [need] a policy. You [need] a policy 
which says we are not going to encourage and/or 
allow conversions until we have an answer to the 
displacement problem. Okay, you don't necessarily let 
the private market do whatever it wants, telling the 
seniors, "We'll deal with you later on." Public policy 
means you do both at the same time. 

David Orr 

With respect to. . .alternatives to courts, I think in 
Chicago the best hope is community organizations, 
and the pressure from community organizations. . .In 
public housing that means tenant organizations. And 
in other kinds of neighborhoods that means communi- 



ty organizations putting the pressure on. In some cases 
it means — in many cases in this city now, it means 
neighborhood development entities doing their own 
rehabilitation, doing their own construction, doing 
their own management so that they solve those 
problems directly. And in other cases it means 
political organizing to put the pressure on local 
officials to make sure those kinds of provisions are 
enforced. 

Leonard S. Rubinowitz, Professor 

Law and Urban Affairs 

Northwestern Univ. 



128 



Appendix I 

THE CHICAGO HOUSING AUTHORITY 



March 11, 1981 



MEMORANDUM TO THE COMMISSIONERS 
SUBJECT: Committee on Problem Families 



At the February 26, 1980 Commissioners Meeting resident leaders commented on 
the high crime rate at certain developments, the need to evict problem fami- 
lies, the problem of witness intimidation, the length of time it takes to 
evict problem families, the extensive court delays, and inadequate screening 
of new tenants. The Commissioners suggested that staff meet with housing 
managers and LAC representatives to review our screening and eviction policies 
and practices and to submit recommendations to the Board. 

A Committee on Problem Families was established to review the Authority's screen- 
ing and eviction policies and procedures and to submit specific recommendations 
to the Executive Director and the Commissioners. The Committee was comprised 
of both staff and residents. Staff members Included Robert Murphy, Chairman, 
Harvey Peck, Winston Moore, Geraldlne Hancock, Donald Pettis, Eula Collins, 
Dorothy Gayles, Samuel Rice, Alyce Evans, Herman Johnson, Eva Pious and Elmore 
Richardson. Resident members included Artensa Randolph, Mary Cowherd, Delores 
Watkins, Willie Baker, Lucille Wood, Maple Lathan, Violet Kasper and Gloria 
Williams. 

The Committee, including a Subcommittee, met approximately eight times during 
1980. In May, 1980, the Committee completed its review of the Authority's 
screening and eviction policies and procedures and prepared its list of 
recommendations for submission to the Executive Director. However, some 
committee members felt that recommendations for working with problem fanilies 
to try to prevent their eviction should also be submitted to the Executive 
Director. A Subcommittee was appointed to review the Authority's policies 
and procedures for working with problem families to avoid eviction and to 
submit its recommendations to the full Committee. The Committee members also 
decided that the recommendations for improving our screening and eviction 
policies and procedures should be sent to the managers and local advisory 
councils and that they be allowed 30 days to review the report and submit their 
comments and recommendations. 

In August, 1980 the Subcommittee submitted to the full Committee its recommenda- 
tions for working with problem fanilies to prevent their eviction. On October 
24, 1980 a copy of the Subcommittee's report for working with problem families 
to prevent their eviction was sent to all managers and LAC presidents for re- 
view and comment. The Committee recommended that they be given 30 days to 
submit their comments and recommendations. 

No comments on either report were submitted by the 19 Local Advisory Council 
Presidents. The few comments submitted by four or five housing managers were 
reviewed and were considered in preparing the final report. The report, copy 
attached, is divided into three parts; The first report contains recommenda- 
tions for Screening of Families Moving Into Public Housing. The second contains 
Recommendations for Accelerating the Eviction of Undesirable Families. The 
Third contains Recommendations for Working with Social Problem Families to 
Prevent Evictions. 



129 



-2- 



Staff believes that the recommendations contained in these three reports are 
sound and in the best interest of the Authority. This Implementation should 
assist staff in improving the screening and eviction of social problem familiea 
as well as enhancing staff knowledge and skills in working with residents to 
prevent their eviction. 

Commissioner approval is requested to begin Implementing these recommendations. 



G. W. Master 
Executive Director 



Reproduced by Central Advisory Council 
54 W. Cermak Road - ml 



130 



Report No. 1 

CHICAGO HOUSING AUTHORITY 

Reconmendatlons for Improving the Screenln)^ of Families 

Moving Into .Public Housing 

1. APPLICATION FOR HOUSING 

Problem Statement 

The limited amount of Information contained on the one-page application 
for housing makes It difficult for Central Rental Office staff to deter- 
mine whether the family is desirable and likely to adjust to community 
living. 

Recommendation 

The four-page Application for Housing formerly used by CRO should, with 
necessary revisions, be relnstltuted to provide Information needed to 
help prevent the housing of undesirable families. APPROVED 

2. REGISTRATION CARDS 

Problem Statement 

The Inability of staff to readily locate vacate cards sometimes results 
In the housing of former residents who the housing manager recommended 
not be re-housed. 

Recommendation 

The records of all former residents should be microfilmed to enable CRO 
Interviewers to readily determine whether an applicant la a former CHA 
resident and whether the applicant should bo considered for housing. 

APPROVED 

3. INFORMATION RELEASE 

Problem Statement 

The Increased number of families moving into our housing developments with 
serious physical and mental problems creates problems for staff as well as 
other residents. 

Recommendation 

Central Rental Office interviewers should require applicants, where deemed 
necessary, to sign an information release form to enable CRO to obtain data 
on the applicant from public and private agencies. 

DISAPPROVED 



131 



-2- 

A, SOCIAL HISTORY 

Problem Statement 

The failure by the Welfare Department and other agencies to inform us 
about health problems of CHA applicants sometimes results In the housing 
of undesirable families. 

Recommendation 

CHA staff should work with the Welfare Department and other agencies to 

ensure their prompt response to telephone calls and letters from CRO 

regarding such applicants. ^-r^ . t,-,,,,^,,,..^ 

DISAPPROVED 

5. VACATE BALANCES. 
Problem Statement 



The failure or refusal by some former residents to pay vacate balances 
before being re-housed creates a serious collection problem for the housing 
manager. 

Recommendation 

The Central Rental Office should require former CHA residents who moved 
with a vacate balance to sign a payment plan before approving their 

application for housing. ._ 

APPROVED 

6. VACATE CARDS 

Problem Statement 

The failure by some housing managers to explain, on the vacate card, the 
reason why the family should not be re-housed creates unnecessary delays 
by CRO staff in processing such applications. 

Recommendat ion 

Housing managers should be required to promptly document vacate cards and 
forward to CRO any memos or historical records regarding rent paying habits, 
housekeeping standards, arrest records, etc., of families moving out of 
public housing. 

APPROVED 

7. REGISTRATION FORMS 

Problem Statement 

The increasing number of applicants with criminal records who are housed, 
creates problems for housing managers as well as other residents. 

Recommendation 

The CHA registration form should be revised to Include a statement that 



132 



CHA will investigate the applicant's arrest record, if any, to determine 
whether the applicant meets the Authority's standards of desirability. 

APPROVED 

8. HEARING OFFICER 

Problem Statement 

Applicants who are determined ineligible on the basis of undeslrablllty 
are often required to wait weeks or months for a hearing. 

Recommendation 

A full-time Hearing Officer should be required to conduct hearings with 
such applicants. APPROVED 

9. SOCIAL SERVICE UNIT 

Problem Statement 

Several months are often required to determine the ellgiblliny of applicants 
whose applications must be referred to the CRO Social Service Unit for inves- 
tigation and evaluation. 

Recommendation 

The Social Service Unit staff should be increased to expedite the investiga- 
tion and evaluation of cases referred to that unit. 

DISAPPROVED 
10. RESIDENT COUNCILS 

Problem Statement 

New tenants who are not made aware of the local tenant organization's 
standards and expectations sometimes become Involved in situations that 
result in their early eviction. 

Recommendation 

The Local Advisory Council should participate with local management staff. 
Including the CS.TR Aide; in a pre-leaslng meeting to advise prospective 
tenants about their standards and expectations and the consequencles of 
non-compliance. 

APPROVED 



133 



Report No. 2 
CHICAGO HOUSING AUTHORITY 
Recommendations. for Accelerating the Eylctlon 
of Undesirable Residents 

1. TENANTS GRIEVANCE FROCEDDR£S 

Problem Statement 

The numerous steps involved in implementing the existing 7-member Tenant 
Grievance Hearing Procedure adds 30 to 60 days to the time required to 
evict an undesirable family. 

Recommendation 

The present 7-member Tenant Grievance Panel should be replaced by a 
Hearing Officer to expedite the eviction of undesirable families. 

APPROVED 

2. DOCUMENTATION 

Problem Statement 

The failure by some housing managers to properly document acts of resi- 
dents that threaten or endanger the health, safety or peaceful existence 
of others makes it difficult to evict undesirable families. 

Recommendat ion 

All housing managers should be required to document all acts by residents 
that threaten or endanger the health, safety or peaceful existence of 
others as well as actions taken to prevent a recurrence. 

DISAPPROVED 

3. EVICTIONS 

Problem Statement 

The failure by the Sheriff's Bailiff to evict families within a reasonable 
period after ordering eviction only exacerbates the problen of getting rid 
of undesirable families. 

Recommendat ion 

A committee consisting of the Executive Director, General Counsel, Commis- 
sioner and the CAC president should meet with the Sheriff of Cook County 
to get a commitment that upon expiration of the writ of restitution the 
eviction will take place within thirty (30) days. 

APPROVED 

4. JUDGES 

Problem Statement 

The failure by some Circuit Court judges to understand and appreciate the 
serious crime problems in public housing sometimes results in lenient 



134 



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sentences and the early release and return o£ criminals to our public 
housing developments. 

Recommendat Ion 

A committee consisting of the Executive Director, General Counsel, Commis- 
sioner and the CAC Chairperson should meet with the Circuit Court Judge 
concerning the recurring crime problems In CHA to get some assurance 
that public housing residents convicted of crime will be given stlffer 
sentences. 

5. STATES ATTORNEY 

Problem Statement 

The unawareness of some Assistant States Attorneys of the serious crime 
problem in some public housing developments sometimes results in their 
failure to prosecute residents to the full letter of the law. 

Recommendat Ion 

A committee consisting of the Executive Director, General Counsel, Commis- 
sioner and CAC Chairperson should meet with the States Attorney to inform 
him of recurring crime problems in CHA developments and demand that resi- 
dents who commit crimes be prosecuted to the full letter of the law. 

APPROVED 



135 



Report No. 3 
"■ CHICAGO HOUSING AUTHORITY 

Recommendations for Working With Social Problem 
Families to Prevent Evictions 

1. YOUNG, SINGLE-PARENT FAMILIES 

Problem Statement 

The increase in number of children bom out of wedlock. Instances of 
unauthorized occupancy, use of apartment as "hangouts," and reports 
of gambling, prostitution and drug traffic in apartments leased to 
young, single-parent families has had a deleterious effect on some of 
our housing developments. DISAPPROVED 

Recommendations 

a. A special form should be prepared for staff use In identifying 
interests and needs of young, single-parent families, particularly 
at the time of Initial home visit. 

b. Young Parents Centers, similar to the one established at Rockwell 
Gardens by the Chicago Urban League, should be established at all 
family housing developments to help young, single-parents resolve 
their problems. APPROVED 

c. An on-site Informational service center should be established at 
each local management office to serve as a resource for young, 
single-parent families.. APPROVED 

d. Staff and residents should collaborate in sponsoring programs -and 
activities geared to the Interests and needs of young, single- 
parent families. 

2. DOCUMENTATION 

Proble m Sta tement 

The failure by some management offices to maintain complete and accurate 
records of staff contacts with residents concerning such problems as 
truancy, emotionally disturbed persons, poor housekeeping, and child 
abuse mades it difficult to evict such residents. Further, existing 
staff often lack the training and experlenre needed to Identify and 
work with such families. 

Recommend ations 

a. A new CHA form should be developed to assist staff in documenting 
contacts with social problem families. 

b. Training programs or seminars should be established to assist staff 
In identifying problems faced by social problem families. 

APPROVED 



136 



-2- 



POOR HOUSEKEEPING 

Problem Statement 

The Increase in poor housekeeping among families in both family and 
senior housing developments has exacerbated the infestation problem 
in some of our housing developments. 

Recommendations 

a. Poor housekeeping families should be identified and sjaff visits 
scheduled to assist these families in improving" their housekeeping 
standards. APPROVED 

b. The Annual Housekeeping Inspection Team should be re-established 
to conduct the HUD - required annual inspection of all dwelling 
units. 

c. Homemaklng Centers should be established in all family housing develop- 
ments to help families Improve their housekeeping standards. 

APPROVED 

d. Homemaklng services now funded through CHA and CETA should be extended 
to all housing developments. 

e. Staff home visits within a 30-day period following initial occupancy 
should be relnstltuted at all housing developments. 

EMOTIONAL PROBLEMS 

Problem Statement 

The increase In the number of emotionally disturbed families and elderly 
in CHA has created fear and apprehension Eunong residents at some housing 
developments. Moreover, some staff lack tlw trAltxlng and oxpericnce to 
deal with this type of problem. 

Rec ommendat ions 

a. Meetings between the local management staff, local advisory council, 
and community-based mental health centers, both city and state, should 
be scheduled to help improve referrals and follow-up services. 

APPROVED 

b. Staff should be Informed about the national de-emphasis on institutional- 
ization of disabled and handicapped persons and the Increasingly impor- 
tant role of public housing in providing decent, safe and sanitary 
housing for this group of citizens. 



137 



Appendix II 






UCJii/1981 



THE SECrlETARV Or HOUSitJG AND URSAuN DEVELOPMENT 
WASHINGTOfV, DC. 20*10 



Hay 23, 1981 



Konorshle Jjwc M. Dyme 
Kaynr of Chicago 
Chicago, lUiuois 60602 

Dear toyor Eymc: 

This letter concerns tl^ pendintj request of Uig Gucago Housing 
Autliarity for an a<irinistx<itive loan frcra the Federal Govera-nsnt in'ths 
a.'oxint of 549 million to provide firiancing for the opsration of the 
Authority through the baleuice of this fiscal year. T^iis a-rount vjould 
be in sddition to the -"jSg-S million already advanced by the Fedaml 
GoverrnwTt to the CIA as its fair share 1931.qp=ratijr>g s\±)sic3y as veil 
as §3.3 million pro-.'id&d as an adjustirent for 1930 utility' costs. Ma 
also \r>d;irstar<3 tJ-at thre CHA e;<pects to receive $4 rJJJ.ian frcn the 
State of Illinois midfr the Federal Hare &icrgy Assistajioe Program, — 

At the tiire Uint v<e gran tod the last admiiii strati ve loan to CFIA, 
then Assistajit Secretary lawrcnoe B. Simons advised the Ghairrr^i 
of the CHA, Charles .<9-^ibel, by a lett^x^r dated Scptarher 8, 19B0, that .- 
firiarcial aid miglit b2 available iii the future "if, during the course 
of fiscal year 1981, the CllA nmjitains a financially balanced ojjeratiori," 
Despite this warrung, the CKA lias failed to acJujeve a neaiungfuUy ■ 
balanced budget for tJ^ie current fiscal year ai>d is apF>arently continuing 
to add to its cumulative deficit. 7^ a result of the increasing size 
of this deficit, prepa^iiejit of tJic annual operating subsidy hai? been 
require at an earlier date each ycar. 

Ihe principal sources \v)\ich cxripound Uie problan of operating 
deficits at Oe CriA ixif^^ix to be in the area of labor costs, rent 
collection and elevator maintenance expanses, ^fc understand that ths CHX 
is using irrsdexnizafaon fiavls to correct the elevator problBTi. Vte also 
understand that the OP^ is moving to eliminate flat oeiling rents a;-id 
that it is anticipated that rent roosiiits 5h:?uld inpro'/a in the futvre, 
although rrcre rajdd acliievcrcnt of the objective of nuodjrrun statutory 
rent collection is needed. However, tJie ack does net appear to be taJdng 
adequate steps to^'ard reducing cy.Ck^ssiveily high labor oosta. 

Before any further fiiiancial aKsLstanoe can be provided, thierefore, 
wa nvist be coiivinoed UvTt tJie C-Lty and tl->e Chicago nausii>g A'othority £ire 
taJclng BCtia-\s which will result in dsrronstrable reductions in labor oo5ts 
and increases in rent reo^iirts. \^ must also be oomdnccd that the City 
and the State of Illiiiois are prepared to caiiy out their responsibilities 
with respect to the CHA by providing additional assistance to help solv-e 
the severe cost arid iranayefront pnablcn^. 



138 



vfe are prepiure-i to a'jthorize ai\ adr^ini strati ve lam of $16 pilliaT, 
v.tud-1 would i>5 aocaqpT i shec^ thrc^J^jh chort l^rm private rarket finr-Jicing, 
csoriLiry^ent uixm a vvrittcn agrecirt;.-)t frcri tJi2 City of Chioigo arid tr.e 
Chicago fc-jsirr-j 'lUttorit^' that the follcwing steps will be talsen; 

(1) Current labor costs will he redaoed b,' elimLnatinc; tha 
practioe o£ using skilled labor for u:\s)d.lled jobs, 
ree>:amini-ng wage rotes, ard reducirhg cv'artiiTe work. 

/^ (2) CHA vdll insure that rraj-dmon rents U7>3sr current Ixtj are 
(, est2hlisl>€si for all ba-i.-ints. 

(3) CH?v aj-d the City of Chicaao will cooperate in a 

federally-sponsored nuj-aytfrent auiit of the total CHA 
operation to identify ot]«r nvjiagciTent irrpny/aients, 
iind will ta>:e prcr^jt action to irplement any manacjareat 
changes i-eoaTR"cndcd by tiie nu,^it and afprovisi by KUO. 

(4> "The City of Qiicago will pro-.-ide additional assistance to 

Kalp the OIA iTt,>;t its 19 SI c^^rating costs and will seek the 
sv;K»2rt an.d cooperation of tha State of Illinois in providing 
whatever assistance iray be available from state sources. 

Further Federal assistance this ^-ear would be presuised vpon satisfacbory 
prcxjress t<7<rard aduevixig each of these oonditions. 




139 



- U. S. GOVERNMENT PRINTING OFFICE : 198J 383-040/135 



UNIVERSITY OF MARYLAND 

SCHOOL OF LAW 
LIBRARY 

^aALTiMaiK, marvl;.;;^